Venkatarama Aiyar, J.
1. The petitioners are dealers carrying on business in the City of Madras inthe sale and purchase of yarn, and they have filed the present applicationsunder Art. 32 of the Constitution for the issue of a writ of prohibition orother appropriate writ restraining the State of Andhra from taking proceedingsfor imposing tax on certain sales effected by them in favour of merchants whoare residing or carrying on business in what is now the State of AndhraPradesh, on the ground, inter alia, that the said sales were made in the courseof inter-State trade, and that no tax could be levied on them by reason of theprohibition contained in Art. 286(2) of the Constitution.
2. The course of dealings between the parties resulting in the above saleshas been set out in para. 5 in Petition No. 220 of 1955. It is therein statedthat the dealers in Andhra would place orders for the purchase of yarn with thepetitioners in Madras, that the contracts would be concluded at Madras, that thegoods would be delivered ex-godown at Madras and would thereafter be despatchedto the purchasers either by lorries or by rail as might be directed by them,that when the goods were sent by rail, the railway receipts would be takeneither in the name of the consignees, and sent to them by post or in the nameof the consignor and endorsed to the purchasers and delivered to them in Madrasor sent to them by post endorsed in favour of a Bank and the purchasers wouldtake delivery of those receipts after payment to the bank. It is said that inall cases price of the goods was paid in Madras.
3. On the above allegations, it is manifest that the sales mentioned thereinare not all of the same kind, and in point of law, the incidents attaching tothem might be different. A consideration of the validity of the imposition withreference to the several classes of sales mentioned above would be wholly airyand pointless without a determination of the facts relating to them, which,however, have not been investigated. Counsel for the petitioners, however,concedes that the dispute in these proceedings is confined to the proposedimposition of tax, in so far as it relates to sales of the character mentionedin the Explanation to Art. 286(1)(a), that is to say, sales in which theproperty in the goods sold passed outside the State of Andhra but the goodsthemselves were actually delivered as a result of the sale for consumptionwithin that State. These sales have been referred to in the arguments before usas 'Explanation sales', and it will be convenient to adopt thatexpression in referring to them in this judgment.
4. It will be seen that the above sales would all of them have beenintra-State, so long as the Andhra State formed part of the composite State ofMadras, and questions of the character now agitated before us could not thenhave arisen. On September 14, 1953, Parliament enacted the Andhra State Act (30of 1953), whereby a separate State called the State of Andhra was constitutedincorporating therein territories which had previously thereto formed part ofthe State of Madras, and this Act came into force on October 1, 1953. Under s.53 of the Andhra State Act, the laws in force in the territories in the AndhraState prior to its constitution are to continue to be in force even thereafter,and one of those laws is Madras General Sales Tax Act (Madras 9 of 1939),hereinafter referred to as the Madras Act. Section 54 of the Andhra State Actconferred on the Government a power to adapt laws for the purpose of facilitatingthe application of any law previously made, and in exercise of the powerconferred by this section, an Adaptation Order was passed on November 12, 1953,whereby the word 'Andhra' was substituted for the word'Madras' in the Madras Act. We shall hereafter refer to the MadrasAct as continued and applied in the State of Andhra as the Andhra (Madras) Act.
5. It will be convenient at this stage to refer to the relevant provisionsof this Act. The preamble to the Act states that 'it is expedient to providefor the levy of a general tax on the sale of goods in the State ofMadras'. 'Sale' is defined in s. 2(h), omitting what is notmaterial, as meaning
'every transfer of the property in goods by oneperson to another in the course of trade or business for cash or for deferredpayment or other valuable consideration.'
Section 2(i) defines'turnover' as 'the aggregate amount for which goods are eitherbought by or sold by a dealer, whether for cash or for deferred payment orother valuable consideration'. Section 3 is the charging section andprovides that every dealer shall pay for each year tax on his total turnoverfor such year. By the Madras General Sales Tax (Amendment) Act No. 25 of 1947,a new Explanation was added to the definition of 'sale', and it is asfollows :
6. Explanation 2 : 'Notwithstanding anything to contrary in the IndianSale of Goods Act, 1930, the sale or purchase of any goods shall be deemed, forthe purposes of this Act, to have taken place in this Province, wherever thecontract of sale or purchase might have been made -
(a) if the goods were actually inthis Province at the time when the contract of sale or purchase in respectthereof was made, or
(b) in case the contract was forthe sale or purchase of future goods by description, then, if the goods areactually produced in the Province at any time after the contract of sale orpurchase in respect there of wad made.'
7. This amendment came into force on January 1, 1948.
8. In Poppatlal Shah v. The State of Madras : 1953CriLJ1105 , this Courthad to consider the scope of the definition of 'sale' in s. 2(h) andof Explanation 2, and it was therein held that thought the power to tax a salewas really a power to tax a transaction of sale and a law imposing such tax wouldbe competent if any of the ingredients of sale had taken place within theState, the Madras Act had, by its definition of 'sale' in s. 2(h)prior to the enactment of Explanation 2, imposed a tax only when the propertyin the goods passed within the State, and that in respect of sales which hadtaken place prior to the amendment, the tax would be unauthorised if theproperty in the goods passed out side the State of Madras. It was also observedthat after the amendment came into force, a tax on a sale which came withinExplanation 2 would be valid. That was the position in law under the Madras Actprior to the enactment of the Constitution.
9. It is now necessary to refer to the changes effected in the law by theConstitution. Article 286, which is relevant for the present purpose, is asfollows :
286(1). 'No law of a Stateshall impose, or authorise the imposition of, a tax on the sale or purchase ofgoods where such sale or purchase takes place -
(a) outside the State; or
(b) in the course of the importof the goods into, or export of the goods out of, the territory of India.
Explanation - For the purposes ofsub-clause (a), a sale or purchase shall be deemed to have taken place in theState in which the goods have actually been delivered as a direct result of suchsale or purchase for the purpose of consumption in that State, notwithstandingthe fact that under the general law relating to sale of goods the property inthe goods has by reason of such sale or purchase passed in another State.
(2) Except in so far asParliament may by law otherwise provide, no law of a State shall impose, orauthorise the imposition, of, a tax on the sale or purchase of any goods wheresuch sale or purchase takes place in the course of inter-State trade or commerce:
Provided that the President maybut order direct that any tax on the sale or purchase of goods which was beingawfully levied by the Government of any State immediately before thecommencement of this Constitution shall, notwithstanding that the imposition ofsuch tax is contrary to the provisions of this clause, continue to be levieduntil the thirty-first day of March, 1951.
(3) No law made by theLegislature of a State imposing, or authorising the imposition of, a tax on thesale or purchase of any such goods as have been declared by Parliament by lawto be essential for the life of the community shall have effect unless it hasbeen reserved for the consideration of the President and has received hisassent.'
10. Article 372(2) enacts that,
'For the purpose of bringing the provisions of anylaw in force in the territory of India into accord with the provisions of thisConstitution, the President may by order make such adaptations andmodifications of such law, whether by away of repeal or a amendment, as may benecessary or expedient, and provide that the law shall, as from such date asmay be specified in the order, have effect subject to the adaptations andmodifications so made, and any such adaptation or modification shall not bequestioned in any court of law.'
11. In exercise of the power conferred by this provision, the President madeAdaptation Orders with reference to the Sales Tax Laws of all the States, andas regards the Madras Act, he issued on July 2, 1952, the Fourth Amendmentinserting a new section, s. 22 in that Act. It runs as follows :
'Nothing contained in thisAct shall be deemed to impose or authorise the imposition of a tax on the saleor purchase of any goods where such sale or purchase takes place -
(a)(i) outside the State ofMadras, or
(ii) in the course of import ofthe goods into the territory or of India or of the export of the goods out ofsuch territory, or
(b) except in so far asParliament may by law otherwise provide, after the 31st March, 1951, in thecourse of inter-State trade or commerce, and the provisions of the Act shall beread and construed accordingly.
Explanation :- For the purposesof clause (a)(i) a sale or purchase shall be deemed to have taken place in thatState in which the goods have actually been delivered as a direct result ofsuch sale or purchase for the purpose of consumption in that State,notwithstanding the fact that under the general law relating to sale of goodsthe property in the goods has by reason of such sale or purchase passed inanother State.'
12. It will be noticed that the Explanation to Art. 286(1)(a) is reproducedverbatim in s. 22 of the Madras Act. The true meaning and scope of thisExplanation came up for consideration before this Court in The State of Bombayand another v. The United Motors India Ltd., and other : 4SCR1069 .Therein, it was held by a majority that though the sales falling within theExplanation would, in fact, be in the course of inter-State trade, they became,by reason of the fiction introduced therein, invested with the character ofintra-State sales, and would be liable to be taxed by the State within whichthe goods were delivered for consumption. Acting on this judgment, the Board ofRevenue (Commercial Taxes) Andhra State, issued a notification on July 13,1954, calling upon dealers to submit returns of their turnover of sales inwhich goods were delivered in the Andhra State for consumption, and a copythere of was sent to the Madras Yarn Merchants' Association, of which thepetitioners are members. The Association disputed the liability of the Madrasdealers to pay any tax in respect of the sales to the Andhra dealer, and aftersome correspondence, the Andhra State finally issued on June 30, 1955, noticesto the petitioners to send their returns of turnover by July 15, 1955, failingwhich it was stated that assessment would be made on the best judgment basis,and that, further, the dealers would be liable to the penalties prescribed bythe law (Vide Annexure H to the petition). Thereupon, the petitioners havefiled the present petitions challenging the validity of the demand made by theAndhra State on the ground, inter alia, that the sales proposed to be taxedwere inter-State sales, and that they were immune from taxation under Art. 286(2).These petitions were filed on various dates in July and August, 1955.
13. While they were pending, the question of the true scope of theExplanation to Art. 286(1)(a) came up again for consideration before this Courtin The Bengal Immunity Company Limited v. The State of Bihar and other : 2SCR603 . By its judgment dated September 6, 1955 this Court held, againby a majority, that the sales falling within the Explanation being inter-Statein character, could not be taxed by reason of Art. 286(2), unless Parliamentlifted the ban, that the Explanation to Art. 286(1)(a) control only that clauseand did not limit the operation of Art. 286(2), and that the law had not beencorrectly laid down in The United Motors case : 4SCR1069 . On the decisionin The Bengal Immunity Company case : 2SCR603 it cannot be doubtedthat the claim of the Andhra State to tax Explanation sales would beunconstitutional, and indeed, that was admitted by the State in a statementfiled on October 21, 1955, wherein it was stated that having regard to thedecision aforesaid, the petitions might be allowed but without costs. Beforefinal orders were passed on the petitions, however, the Sales Tax ValidationOrdinance No. III of 1956, was promulgated on January 30, 1956, and that waslater replaced by the Sales Tax Laws Validation Act (7 of 1956) and that cameinto force on March 21, 1956. Section 2 of this Act runs as follows :
'Notwithstanding any judgment, decree or order ofany court no law of a State imposing, or authorising the imposition of, a taxon the sale or purchase of any goods where such sale or purchase took place inthe course of inter-State trade or commerce during the period between the 1stday of April, 1951, and the 6th day of September, 1955, shall be deemed to beinvalid or ever to have been invalid merely by reason of the fact that suchsale or purchase took place in the course of inter-State trade or commerce; andall such taxes levied or collected or purporting to have been levied or collectedduring the aforesaid period shall be deemed always to have been validly leviedor collected in accordance with law.'
14. On February 19, 1957, the Andhra State which had become the State ofAndhra Pradesh under s. 3(1) of the States Reorganisation Act (37 of 1956)filed a fresh statement that by reason of the Validation Act the State wasentitled to impose a tax on the Explanation sales, which had taken place duringthe period between the 1st day of April, 1951, and the 6th day of September,1955 (which will hereinafter be referred to as the specified period), and thatthe petitions should therefore be dismissed.
15. The petitioners challenge the correctness of this position. They contendthat the Andhra (Madras) Act does not, in fact, impose tax on the Explanationsales, and that, in consequence, the Validation Act can have no effect on it;that the Validation Act is itself unconstitutional and void; that the Act evenif valid, does not validate s. 22 of the Andhra (Madras) Act; that it validatesonly levies and collections of tax already made, and does not authorise theinitiation of fresh proceedings for assessment of tax or for realisation of thesame; that even if the Act authorised fresh imposition of taxes, that could notbe done without further legislation pursuant thereto by the State, an that noaction could be taken on the basis of s. 22 of the Andhra (Madras) Act, as,being unconstitutional when enacted, it was for all purposes non est; that taxon the sale of yarn could under the Act be levied only at a single point andthe State of Madras having imposed a tax on the sale of goods now proposed tobe taxed, the Andhra State could not impose a tax once again on the sale of theself-same goods, and that, further, the tax on yarn would, so far as the AndhraState is concerned, be bad as being hit by the Essential Commodities Act (52 of1952), read with Art. 286(3).
16. It must be mentioned that similar to the Adaptation Order which enacteds. 22 in the Madras Act, there were Adaptation Orders by the President withreference to the Sales Tax Laws in all the States, and provisions similar to s.22 were enacted therein. As any decision by this Court on the questions raisedin the petitions must conclude similar questions under the laws of other States,those States applied for and obtained permission to intervene in theseproceedings, and we have heard the Advocates-General of Madras, Uttar Pradeshand Bihar on the questions. As the main point for determination is the vies ofthe Sales Tax Laws Validation Act (which will hereinafter be referred to as theimpugned Act.), the Union of India has intervened, and the learnedSolicitor-General has addressed us on the questions relating to the validity ofthat Act. Certain assessees who are interested in the decision of the abovequestions also applied for and obtained permission to intervenes, and they arethe Mysore Spinning and ., the TataIron and Steel Co. Ltd., and the Madura Mills Co. Ltd., and counsel appearingfor them have, in general, supported the petitioners.
17. Counsel for the Madura, Mills Co. Ltd., raised a further contentiondifferent from and inconsistent with the position taken by the petitioners andother interveners, and that is that under Entry 42 in List I of the SeventhSchedule to the Constitution, inter-State trade and commerce is the exclusivedomain of the Union Legislature, that tax on inter-State sales is comprisedtherein, that the States have accordingly no power to tax such sales, and thatParliament is not competent to authorise them to impose such a tax, and that,accordingly, the impugned Act is wholly misconceived and inoperative.
18. On these contentions, the questions that arise for our determination are:
(I) Whether the Andhra (Madras)Act, in fact, imposes a tax on the class of sales falling within theExplanation to Art. 286(1)(a);
(II) Whether the impugned Act isultra vires on the ground that it is not authorised by the terms of Art.286(2);
(III) (a) Whether s. 22 of theAndhra (Madras) Act is within the protection of the impugned Act, and
(III) (b) Whether the impugnedAct validates only levies and collections made during the specified period, orwhether it authorises the imposition and collection of taxes on such sales infuture;
(VI) Whether s. 22 of the MadrasAct was null and void on the ground that it was in contravention of Art.286(2), and whether the proceedings sought to be takenthere under on thestrength of the impugned Act are incompetent;
(V) Whether tax on inter-Statesales is within the exclusive competence of Parliament, and whether theimpugned Act is, in consequence, bad as authorising the States to levy tax;
(VI) Whether the proposedimposition of tax is illegal on the ground that successive sales of yarn aresubject under the law to be taxed at only one point, and as the State of Madrashas already taxed the present sales, the State of Andhra cannot again levy atax on them; and
(VII) Whether the proposedimposition of tax on yarn by the Andhra State is hit by the EssentialCommodities Act, read with Art. 286(3), and is illegal
(I) : The first question thatfalls to be determined is whether the Andhra (Madras) Act, in fact, imposes atax on the Explanation sales. Only if it does that, would the further questionsas to the vires and the operation of the impugned Act arise for consideration.We have already referred to the relevant provisions of the Madras Act and tothe decision of this Court in Poppatlal Shah v. The State of Madras S.C.R. 677, wherein it was held that under the definition of 'sale'in s. 2(h) of that Act and apart from the Explanations to it which are notmaterial for the present discussion, power had been taken by the Province ofMadras to tax only sales in which property in the goods passed inside theState. It must, therefore, be taken that under the Act, as it stood prior tothe Constitution, the State of Madras had no power to impose a tax on sales ofthe kind mentioned in the Explanation to Art. 286(1)(a). Now, the question iswhether the Adaptation Order of the President (Fourth Amendment) dated July 2,1952, has, by the insertion of s. 22 in the Madras Act, altered the position.The contention of the respondent is that it has, because it has bodily incorporatedthe Explanation to Art. 286(1)(a) in the section itself, and as under thatExplanation, all sales falling within its ambit would be sales inside the Stateof Madras, they became taxable as sales within the definition in s. 2(h) of theMadras Act; and that accordingly under s. 22 of the Andhra (Madras) Act theExplanation sales become taxable by the Andhra State as sales within thatState.
19. The petitioners dispute this position, and contend that that is not thetrue effect of the Explanation, and that properly construed, it does notauthorised the imposition of any tax which was not leviable under theprovisions of the Act, prior to its enactment. It is argued that the object ofArt. 286 of the Constitution was merely to impose restrictions on the powerwhich the States had under Entry 54 in List II to enact laws imposing tax onsales, and that, in the context, the true scope of the Explanation to Art.286(1)(a) was that it merely took away from the State its power to tax a salein which the property passed inside it if the goods were actually deliveredunder the sale for consumption in another State and not to confer on thedelivery State a power to tax such a sale, and that the Explanation in s. 22which is, word for word, a reproduction of the Explanation to Art 286(1)(a)must be construed as having the same import. Reliance is placed in support ofthis contention on the following observations of this Court in The BengalImmunity Company case : 2SCR603 :
'In clause (1)(a) the Constitution makers haveplaced a ban on the taxing power of the States with respect to sales orpurchases which take place outside the State. If the matter had been left therethe ban would have been imperfect, for the argument would have still remainedas to where a particular sale or purchase took place. Does a sale or purchasetake place at the place where the contract of sale is made, or where theproperty in the goods passes or where the goods are delivered These questionsare answered by the Explanation. That Explanation is 'for the purposes ofsub-clause (a)', i.e., for the purpose of explaining which sale or purchase isto be regarded as having taken place outside a State. By sayings that aparticular sale or purchase is to be deemed to take place in a particular StateExplanation only indicates that such sale or purchase has taken place outsideall other States. The Explanation is neither an Exception nor a Proviso butonly explains what is an outside sale referred to in sub-clause (a). This itdoes by creating a fiction. That factions only for the purposes of sub-clause(a) and cannot be extended to any other purpose. It should be limited to itsavowed purpose. To say that this Explanation confers legislative power on whatfor the sake of brevity has been called the delivery State is to use it for acollateral purpose which is not permissible. Further, it is utterly illogicaland untenable to say that article 286 which was introduced in the Constitutionto place restrictions on the legislative powers of the States, by a side wind,as it were, gave enlarged legislative powers to the State of delivery by anexplanation sandwiched between two restrictions. This construction runs counterto the entire scheme of the article and the explanation and one may see nojustification for imputing such indirect and oblique purpose to thisarticle.'
20. Now, the contention of the petitioners is that these observations aredecisive of the present controversy, because the same pervasive of theexpressed in ipsissima verba cannot have one meaning in Art. 286(1)(a) andquite a different one in s. 22 of the Madras Act; and on the construction putby this Court on the Explanation to Art to 286(1)(a), the Explanation to s. 22of the Andhra (Madras) Act must be interpreted as prohibiting States other thanAndhra from taxing sales under which goods are delivered for consumptionoutside those State, even though property passed inside them and not asauthorising the State of Andhra to tax sales in which goods area deliveredtherein for consumption, even though property in the goods passed outside thatState. It is argued that this conclusion is reinforced by the opening words ofs. 22, viz, 'Nothing contained in this Act shall be deemed to impose ofauthorise the imposition of a tax on the sale or purchase of any goods'.The effect of this, it is said, is to impose a restriction on the power whichthe State previously possessed, of taxing sales coming within the definition ins. 2(h) and not to enlarge it. The decision in Government of Andhra v. NooneyGovindarajulu is cited in support of thesecontentions.
21. The error in this argument lies in this that it focuses attentionexclusively on the terms in which the Explanations are couched in Art.286(1)(a) and is. 22 and completely overlooks the fundamental difference in thecontext and setting of these two enactments. The scope and purpose of Art. 286have been considered at length in the decisions of this Court in The UnitedMotors case : 4SCR1069 as also in The Bengal Immunity Company case : 2SCR603 , and it is sufficient to briefly recapitulate them. UnderEntry 48 in list II of the Seventh Schedule to the Government of India Act,1935, the Provincial Legislature had the exclusive competence to enact a lawimposing a tax on the sale of goods, and under s. 99(1), such a law could bemade 'for the Province or for any part thereof'. In Wallace Brothers& Co. Ltd. v. Income-tax Commissioner  L.R. 75 IndAp 86, the questionarose as to the validity of certain provisions of the Indian Income-tax Act,which sought to tax non-resident foreigners in respect of their foreign income.The Indian Legislature had under Entry 54 in List I of the Government of IndiaAct power to enact laws imposing tax on income other than agricultural income,and under s. 99(1) the law could be made 'for the whole of British Indiaor for any part thereof'. It was held by the Privy Council that therequirements of s. 99 were satisfied if there was sufficient territorialconnection between the State imposing the tax and the person who was sought tobe taxed, and the receipt of income by the assessees in British India furnishedsufficient nexus to give validity to the legislation imposing tax on their foreignincome. If this doctrine of nexus is applicable to laws imposing tax on sales -and it was applied by this Court to those laws in the United Motors case : 4SCR1069 and in Poppatlal Shah's case  S.C.R.677] - then it would be competent to the State to enact a lawimposing a tax on sales not merely when the property in the goods passed withinthe State but even when it did not, if there was sufficient connection betweenthe State and the transaction of sale, such as the presence of the goods in theState at the date of the agreement, as was held recently by this Court in Tata Iron & Steel Co. Ltd. v. State of Bihar : 1SCR1355 . In fact,acting on the nexus theory the legislatures of the States enacted State TaxLaws adopting one or more the next as the basis of taxation. This resulted inmultiple taxation, as a consequence of which the free flow of commerce betweenthe States became obstructed and the larger economic interests of the countrysuffered. It was to repair this mischief that the Constitution, while retainingthe power in the States to tax sale under Entry 54 in List II sought to imposecertain restrictions on that power in Art. 286. One of those restrictions iscontained in Art. 286(1)(a) which prohibits a State from taxing outside sales.The Explanation now under consideration is attached to this provision, and itis in this context, viz, in its setting in an Article, the object of which wasto impose fetters on the legislative powers of the States, that this Courtobserved that though positive in form, it was in substance negative incharacter, and that its true purpose was not to confer any fresh power oftaxation on the State but to restrict the power which it previously had underEntry 54.
22. These considerations will clearly be inapposite in construing a taxingstatute like the Madras Act. The object of which is primarily to confer poweron the State to levy and collect tax. When we find in such a statute aprovision containing a prohibition followed by an Explanation which is positivein its terms, the true interpretation to be put on it is that while theprohibition is intended to prevent taxation of outside sales on the basis ofthe nexus doctrine, the Explanation is intended to authorise taxation of salesfalling within its purview, subject of course to the other provisions of theConstitution, such as Art. 286(2). It should be remembered that unlike theConstitution, the law of a State can speak only within its own territories. Itcannot operate either to invest another State with a power which it does notpossess, or divest it of a power which it does possess under the Constitution.Its is mandates can run only within its own borders. That being the position,what purpose would the Explanation serve in s. 22 of the Madras Act. If itmerely meant that when goods are delivered under a contract of sale forconsumption in the State of Madras, the outside State in which property in thegoods passes has no power to tax the sale That is not the concern of theState of Madras, and indeed, the Legislature of madras would be incompetent toenact such a law. In its context and setting, therefore, the Explanation to s.22 must mean that it authorises the State of Madras to impose a tax on sales fallingwithin its purview. Thus, while in the context of Art. 286(1)(a) theExplanation thereto could be construed as purely negative in character thoughpositive in form, it cannot be so construed in its setting in s. 22 of theMadras Act, where it must have a positive content.
23. Nor is there much force in the contention that the non-obstante clausein s. 22 has only the effect of subtracting something from the power to taxconferred on the State by the charging section, s. 3, read with s. 2(h) and notof adding to it. In Aswini Kumar Ghosh and another v. Arabinda Bose an another : 4SCR1 , it was observed by this Court that 'the enactingpart of a statute must, where it is clear, be taken to control the non-obstanteclause where both cannot be read harmoniously'. Now, as the Explanationlays down in clear and unambiguous terms that the sales of the charactermentioned therein are to be deemed to have taken place inside the State inwhich goods are delivered for consumption, full effect must be given to it, andits operation cannot be cut down by reference to the non-obstante clause. Itcannot be put against this construction that it renders the non-obstante clauseineffective and useless. According to the definition in s. 2(h), a sale in whichproperty passes inside the State of Madras will be liable to be taxed, eventhough the goods are delivered for consumption outside that State, but underthe Explanation such a sale will be deemed to have taken place in the outsideState in which goods are delivered for consumption, and therefore the State ofMadras will have no power to tax it. The purpose which the non-obstinate clauseserves is to render the Explanation effective against the definition in s. 2(h)and not to render it ineffective in its own sphere, as determined on its terms.
24. But it is contended that in order to reach this result it was necessarythat the Explanation to s. 22 should have been made a part of the definition of'sale' under s. 2(h), because under s. 3, which is the chargingsection, it is the turnover of sales that is subject to tax, that sale for thepurpose of that section is only what is defined as 'sale' under s.2(h), and that the Explanation sales not having been brought within thatdefinition, no charge could be imposed thereon. The Explanation in s. 22, it isargued, cannot override s. 2(h), and if it object was to confer on the State apower to tax sales falling within its ambit, that has not, in fact, beenachieved. It is pointed out by way of contrast that in the Sales Tax Laws ofsome other States, such as Bihar and Uttar Pradesh, the Explanation has beenadded to the definition of sale. Now, a contention that what the Legislatureintended to bring about it has failed to do by reason of defectivedraftsmanship is one which can only be accepted in the last resort, when thereis no avenue left for escape from that conclusion. But that clearly is not theposition here. Section 22 opens with the words. 'Nothing contained in hisAct', and that means that that section is to be read as controlling, interalia, the definition of sale in s. 2(h). Otherwise, sales in which propertypasses in Madras but delivery is outside that State would be taxable under s.2(h) and under s. 3, even though they are within the prohibition enacted in s.22. If the provisions of s. 22 are effective for the purpose of limiting theoperation of sale s. 2(h), we do not see any difficulty in construing theExplanation therein as equally effective for the purpose of enlarging it.Again, it is a rule of construction well-established that the several sectionsforming part of a statute should be read, unless there are compelling reasonscontra, as constituting a single scheme and construed in such manner as wouldgive effect to all of them. On this principle, s. 2(h) and s. 22 must be readtogether as defining what are sales, which are taxable under the Act and whatare not, and so read, the Explanation really means that in sales in which goodsare delivered for consumption in the State of Madras, the property thereinshall be deemed to have passed inside that State, notwithstanding that it has,under the Sale of Goods Act, passed outside that State. On this construction,these sales will fall within the definition in s. 2(h) and will be taxable. Thecontention of the petitioners highly technical and based on the non-insertionof the Explanation in s. 2(h) must, in our opinion, be rejected as unsound.
25. It is next contended that the power of the President under Art. 372(2)is merely to bring the provisions of the State laws into conformity with Art.286, and that having regard to the interpretation put on that Article in The Bengal Immunity Company case : 2SCR603 , the Explanation in s. 22would be valid in so far as it prohibits the State of Madras from imposing atax on sales in which goods are delivered outside Madras, though propertytherein passed inside that State, but that in so far as it makes taxable salesin which property passes outside the State of Madras but the goods themselves aredelivered for consumption in Madras, it is much more than bringing the Statelaw into conformity with Art. 286, and is, in consequence, unauthorised andbad. It is argued that such a provision could be enacted by the Legislature ofMadras, as was in fact, done by the legislatures of many of the States, but thePresident could not do it in exercise of the special and limited powerconferred on him by Art. 372(2). That power is merely, it is contended, to takethe definition of 'sale' in s. 2(h) of the Madras Act, strike outtherefrom whatever is repugnant to Art. 286, such as sales in which good aredelivered for consumption outside Madras, and leave it there and not to add toit.
26. We are not satisfied that that is a correct view to take of the powers ofthe President under Art. 372(2). It is to be observed that Art. 286(1)(a) andthe Explanation thereto form, in their setting in a taxing stature, integralparts of and different facets of the same concept. Sales in which propertypasses outside that State of Madras but delivery for consumption is insideMadras are at once inside sales for Madras and outside sales for the otherStates. Now, if in exercise of the power to adapt, the enactment of theExplanation requisite to give effect to one aspect of that concept, that is,for prohibiting the State of Madras from taxing sales when goods are deliveredoutside, we fail to see why it should not operate to give effect to the otheraspect of the concept which is so integrally connected with it, viz., taxing ofsales in which goods are delivered for consumption in the State of Madras, ifit language is comprehensive and wide enough to include such sales. We find itdifficult to hold that the self-same Explanation is intra vires the powers ofthe President in so far as it prohibits the State from taxing sales, in whichgoods are delivered outside the State but is ultra vires in so far as itauthorises that State to tax sales in which goods are delivered inside it.
27. It should be remembered in this connection that the power which thePresident has under Art. 372(2) to adapt is the legislative power of the Statewhose law is adapted, and that includes the power to repeal and amend anyprovision. Provided that the law as adapted is within the legislative competenceof the State and its enactment is in the process of bringing the State law intoconformity with Art. 286, it seems to us that it is within the ambit of thepower conferred by Art. 372(2). The question, however, is of academic interest,because of the concluding words of Art. 372(2), which enact that no adaptationorder made under that provision shall be liable to be questioned. It wassuggested for the petitioners that these words would have no application whenthe adaptation order went beyond the terms of Art. 372(2), and that it was opento them to challenge its validity on the ground that it amounted to more thanbringing the existing law into conformity with Art. 286. We are unable toagree. If the adaptation order is within the scope of Art. 372(2), then it isvalid of its won force, and does not require the aid of a clause such as itcontained in the concluding portions thereof. It is only when the adaptationamounts to something more then merely bringing the State law into conformitywith the Constitutional provisions that there can arise a need for such aclause. In our opinion, the effect of the concluding words of Art. 372(2) is torender the question of the validity of the adaptation non-justiciable. TheAdaptation Order in question must, accordingly, be held to be not open toattack on the ground that it goes beyond the limits contemplated by Art.372(2).
28. It is then argued that even though the Adaptation Order of the Presidentmight not be open to question even if it had imposed for the first time a taxon sales which had not been previously imposed by the Act, nevertheless indeciding whether it does, in fact, impose such a tax, it would be relevant totake into account that the object of Art. 372(2) was only to bring the Statelaws into conformity with the Constitution, and that, in consequence, theExplanation in s. 22 must be construed as having the same meaning as theExplanation in Art. 286(1)(a). This would, no doubt, be a legitimateconsideration in interpreting the language of other Explanation, but then, itmust be remembered that at the time when the Adaptation Order was made, thetrue interpretation on the Explanation to Art. 286(1)(a) had not been thesubject-matter of any decision, and it is therefore difficult to impute to theframers of s. 22 the construction put be this Court on the Explanation to Art.286(1)(a) in The Bengal Immunity Company case : 2SCR603 any morethan the one put on it in The United Motors case : 4SCR1069 . We aretherefore thrown back in the language of the Explanation itself to discover itstrue scope. If, in enacting the Explanation, the Adaptation Order merelyintended to prohibit the State of Madras from imposing tax on sales under whichgoods are delivered from consumption outside that State even though propertytherein passed inside that State, it would clearly have expressed thatintention in words to the following effect : 'For the purposes of clause(a)(i), a sale under which goods are delivered for consumption outside the Stateof Madras shall be deemed to have taken place outside that State,notwithstanding that property in those goods passed inside that State'.But the language of the Explanation is general, and fixes the situs of sales ofan inter-State character in the State in which goods are actually delivered forconsumption. Under this Explanation, a sale under which goods are deliveredoutside the State of Madras will be an outside sale for that State even thoughproperty in the goods passed inside that State, and likewise, as sale underwhich goods are delivered inside the State of Madras will be an inside sale forthe State, even though property in the goods passed outside that State. As thelanguage of the Explanation is general and of sufficient amplitude not merelyto restrict but also to add to the power of other State to tax Explanationsales, and as the reasons for construing it as purely restrictive in Art.286(1)(a) are, as already stated, without force in their application to ataxing statute, we must give full effect to the words of the enactment, andhold that they operate to confer on the State a power to tax Explanation sales.
29. There is one other contention relating to this aspect of the matter,which remains to be considered, and that is that even if the Explanation couldbe construed as authorising the imposition of a tax on the sales mentionedtherein, a reading of the section as a whole makes it clear that, in fact, nosuch tax was imposed, as it expressly enacts that 'Nothing contained inthis Act shall be deemed to impose a tax on inter-State sales'. Theargument is that the Explanation sales being inter-State sales and the sectionhaving exempted them from taxation, they go out of the statute book altogether,and do not exist for the propose of the impugned Act. We are unable to agreewith this contention. Article 286(2) consists of two parts, one imposing arestriction on the power possessed by the States to tax sales under Entry 54 inso far as such sales are in the course of inter-State trade and commerce andanother, vesting in Parliament a power to enact a law removing thatrestriction. If s. 22 had merely enacted that portion of Art. 286(2) whichprohibited imposition of taxes on inter-State sales, that might have furnishedsome plausible ground for the contention now urged by the petitioners; but itenacts both the parts of Art. 286(2), the restriction imposed therein and alsothe condition on which that restriction is to cease, viz., Parliament providingotherwise by law. Taken along with the admitted power of the States to imposetax on sales under Entry 54, the true scope of s. 22 is that it does impose atax on the Explanation sales, but the imposition is to take effect only whenParliament lifts the ban. In other words, it is a piece of legislation imposingtax in praesenti but with a condition annexed that it is to come into force infuture as and when Parliament so provided. It is not contended that there is inthe Constitution any inhibition against conditional legislation. In The Queenv. Burah , it was held be the Privy Council that alegislature acting within the ambit of authority conferred on it by theConstitution has the power to enact a law either absolutely or conditionally,and that position has been repeatedly affirmed in this Court. Vide In re TheDelhi Laws Act, 1912, etc. : 2SCR747 and Sardar Inder Singh v. Stateof Rajasthan : 1SCR605 . It would clearly be within the competence ofthe Madras Legislature to enact a law imposing a tax on sales conditional onthe ban enacted in Art. 286(2) being lifted by Parliamentary legislation, andthat, in our opinion, is all that has been done in s. 22. The Madras Actdefines the event on which the tax becomes payable and the person from whom andthe rate at which it has to be levied, and forms a complete code on the topicunder consideration. It could have no immediate operation be reason of the nearimposed by Art. 286(2), but when once that is removed by a law of Parliament,there is no impediment to its being enforced. That satisfies all therequirements of a conditional legislation. But it was argued that s. 22 of theMadras Act could not be so construed, because it was not open to the Presidentacting in exercise of the power conferred on him under Art. 372(2) to impose aconditional levy; nor would it be competent to the Legislature of Madras tomake a levy conditional or otherwise, unless Parliament had authorised it. Wesee no force in this argument. As Art. 286(2) is itself in two parts, one a restrictionon the power of the State and the other, a condition on which such restrictionwill cease to operate, an adaptation made pursuant thereto must also be similarin is contents. Nor is there in Art. 286(2) any prohibition of any legislationby the State Legislature against enacting laws imposing tax on inter-Statesales. It merely enacts that such law can have in effect. The words 'Nolaw of a State shall impose' mean only that no such law shall be effectiveto impose a tax.
30. It is also contended that under the Sales Tax Acts, the levy of tax isannual and the rules contemplate submission of quarterly returns and payment oftaxes every quarter on the admitted turnover, and that a conditionallegislation under which payment of tax will become enforceable in future wouldbe inconsistent with the scheme of the Act and the rules. But this argument,when examined, comes to no more than this that existing rules do not provide amachinery for the levy and the collection of taxes which might become payable infuture, when Parliament lifts the ban. Assuming that that is the true position,that does not affect the factum of the imposition, which is the only point withwhich we are now concerned. That the States will have to frame rules forrealising the tax which becomes now payable is not a ground for holding thatthere is, in fact, on imposition of tax. It should also be mentioned in thisconnection that the Madras Act makes a clear distinction between sales whichare outside the operation of the Act, and sales which are within its operationbut are exempted from taxation. Section 4 provides that the provisions of theAct shall not apply to the sale of electrical energy, motor spirit,manufactured tobacco and certain other articles. In contrast to this is the languageof s. 22, which expressly enacts that the Act shall not be deemed to impose atax in inter-State sales, except in so far as Parliament may by law otherwiseprovide. We are of opinion that, on the true construction of s. 22 of the Act,there is an imposition of tax on Explanation sales but that it could beenforced only when Parliament so provides.
31. We have so far considered the question on principle and on the languageof the statute. We may now refer to the decisions of the High Courts, whereinthis question has been considered. In Mettur Industries Ltd. v. State of Madras : AIR1957Mad362 , the point directly arose for decision as to whether s.22 of the Madras Act did, in fact, levy a tax on the Explanation sales so as tofall within the protection of the Sales Tax Laws Validation Act. It was heldthat the Explanation to s. 22 had the effect of rendering the sale one insidethe State so as to fall within the definition of that word in s. 2(h), and thatit war taxable. Next in point of time is the decision of the Bombay High Courtin Dial Das v. P.S. Talwalkar A.I.R. 1957 Bom. 71 in which the question arosewith reference to s. 46 of the Bombay Sales Tax Act (Bom. III of 1953),corresponding to s. 22 of the Madras Act. It was held that it did impose a tax,though it was to operate only if Parliaments so provided. Then, there are twodecisions of the Travancore-Cochin High Court, Mathew v. Travancore-CochinBoard of Revenue A.I.R. 1957 T.C. 300 and Cochin Coal Co. Ltd. v. State ofTravancore-Cochin (1956) 7 STC 731 , in which it was held that s.26 of the Travancore-Cochin General Sales Tax Act corresponding to s. 22 of theMadras Act, had not the effect of imposing, of its own force, a tax on theExplanation sales, and the decision in Mettur Industries Ltd. v. Madras State(supra) was not followed. In The Mysore Spinning and . v.Deputy Commercial Tax Officer, Madras : AIR1957Mad368 the Madras HighCourt re-affirmed the view which it had taken in Mettur Industries Ltd. v.State of Madras (supra), and held that s. 22 had the effect of imposing a taxon the Explanation sales. In The Government of Andhra v. Nooney Govindarajulu(supra), the true effect of s. 22 of the Madras Act came up for considerationbefore the Andhra High Court, and it was held therein, differing from MetturIndustries Ltd. v. State of Madras : AIR1957Mad362 and Dial Das v. P. S.Talwalkar A.I.R. 1957 Bom. 71 that in view of the observations of this Courtas to the scope of the Explanation in Art. 286(1)(a), the Explanation in s. 22could not be construed as imposing a tax on the sales mentioned therein, andthat that conclusion also followed on the opening words of the section that'Nothing contained in this Act shall be deemed to impose, or authorise theimposition of a tax........'. For the reasons already given, we are unableto agree with the decisions in Mathew v. Travancore-Cochin Board of RevenueA.I.R. 1957 T.C. 300, Cochin Coal Co. Ltd. v. State of Travancore-Cochin(1956) 7 STC 731 and The Government of Andhra v. NooneyGovindarajulu (1957) 8 STC 297. We are of opinion that the lawhas been correctly laid down in Mettur Industries Ltd. v. State of Madras : AIR1957Mad362 and Dial Das v. P. S. Talwalkar [A.I.R. 1957 Mad. 71].We accordingly hold that s. 22 operated to impose a tax falling within theExplanation, subject to authorisation by Parliament as provided in Art. 286(2).In this view, the contention urged on behalf of the States that the Explanationof Art. 286(1)(a), being a provision of the Constitution, operated by its ownforce too impose a tax on the sales covered by it, and did not require to besupplemented by any State legislation to become effective, does not call forany detained consideration. Suffice it to say that it cannot be maintained ifthe true scope of Art. 286 is to define and limit the powers of StateLegislatures with reference to imposition of sales tax and not to itself imposeit.
(II) That brings us on to the next question which is whether the impugnedAct, Sales Tax Laws Validation Act, is ultra vires on the ground that it is notauthorised by the terms of Art. 286(2). Now, it is a well-known rule ofinterpretation that in order to understand the true nature and scope of an Actit is necessary to ascertain what the evils were which were intended to beredressed by it. The starting point of the trouble which ultimately led to theenactment of the impugned Act is the Explanation to Act. 286(1)(a), which cameinto force on January 26, 1950. The terms in which it is worded undoubtedlysuggest that sales of the description mentioned therein are to be treated assales inside the delivery State for purposes of taxation. That is how it wouldseem to have been understood in the Adaptation Order under which s. 22 wasinserted in the Madras Sales Tax Act and in the Adaptation Orders relating tothe Sales Tax Laws of other States; for, as already stated, in a taxing statuethe language of the Explanation can only mean that a sale falling within itspurview is an inside sale enabling the State to tax it. In The United Motorscase : 4SCR1069 , the construction put by this Court on theExplanation was that though but for it the sales mentioned therein would be inthe course of inter-State trade and commerce, its effect was to covert theminto inter-State sales, so as to bring them within the taxing power of thedelivery State. It was only later that this Court held finally in The BengalImmunity Company case : 2SCR603 that the Explanation sales were notdivested of their character as inter-State sales as the Explanation to Art.286(1)(a) did not govern Art. 286(2), and that in the absence of Parliamentarylegislation as contemplated by Art. 286(2), taxation of sales falling withinits purview would be unconstitutional. This judgment was delivered on September6, 1955.
32. But acting on the apparent tenor and import of the Explanation and theconstruction put upon it in The United Motors case : 4SCR1069 , theStates in India had been levying taxes on the sales falling within its purview.The position on September 6, 1955, was that the States had imposed andcollected large amounts by way of tax on Explanation sales; that there wereproceedings pending for assessment of tax on such sales; and that apart fromthis, the States would have been entitled to take, but for the decision in The Bengal Immunity Company case : 2SCR603 , proceedings for theassessment of tax in respect of those sales. Now, the result of the decision inThe Bengal Immunity Company case : 2SCR603 was that the levy of thetax on the Explanation sales became unauthorised and the States were faced withlarge claims for restitution of the amounts realised, involving threat to theireconomic stability. It should also be mentioned that quite a large number ofdealers had, acting under provisions of the Sales Tax Acts which empowered themto pass the tax on, collected it from their purchasers for the purpose of paymentto the State, and as after the decision in The Bengal Immunity Company case : 2SCR603 they could no longer be called upon to pay it, they stoodto make an unjust gain of it.
33. These were the evils which called for redress, and it was to remedy themthat Parliament enacted the Sales Tax Validation Ordinance No. III of 1956, andeventually replaced it by the impugued Act. Section 2 of the Act provides thatno law of the State imposing a tax on sales which took place in the course ofinter-State trade or commerce between April 1, 1951, and September 6, 1955,shall be deemed to be invalid or ever to have been invalid merely by reason ofthe fact that such sales were in the course of inter-State trade. The sectionfurther provides that all taxes levied or collected under such a law during thespecified period shall be deemed to have been validly levied or collected. Thepolicy behind the Act is obviously to declare the law as interpreted in TheUnited Motors case : 4SCR1069 as the law governing sales fallingwithin the Explanation up to the date of the judgment in The Bengal ImmunityCompany case : 2SCR603 and to give effect to the law as laid downin that decision for the sales effected sub-sequent thereto.
34. The question is whether this Act is unconstitutional as being ultravires the powers of Parliament under Art. 286(2). The petitioners maintain thatit is, and put forward several grounds in support of that position. It isfirstly contended by them that under Entry 54 in List II, the power to makelaws in respect of tax on sales is vested exclusively in the States, that thepower which is conferred on Parliament under Art. 286(2) is only to enact a lawdirecting or permitting the States to impose a tax on inter-States sales andnot to itself enact a law with reference thereto, that the impugned Act beingon to validate Sales Tax Laws is substantive in character and is not authorisedby the terms of Art. 286(2) and is, in consequence, unconstitutional. It isargued that to validate is to confirm or ratify, and that can be only inrespect of acts which one could have himself performed, and that if Parliamentcannot enact a law relating to sales tax, it cannot validate such a law either,and that such a law is accordingly unauthorised and void. The only basis forthis contention in the Act is its description in the Short Title as the'Sales Tax Laws Validation Act' and the marginal note to s. 2, whichis similarly worded. But the true nature of a law has to be determined not onthe label given to it in the statute but on its substance. Section 2 of theimpugned Act which is the only substantive enactment therein makes no mentionof any validation. It only provides that no law of a State imposing tax onsales shall be deemed to be invalid merely because such sales are in the courseof inter-State trade or commerce. The effect of this provision is merely toliberate the State laws from the fetter placed on them by Art. 286(2) and toenable such laws to operate on their own terms. The true scope of the impugnedAct is, to adopt the language of this Court in the decisions in The UnitedMotors case : 4SCR1069 and The Bengal Immunity Company case : 2SCR603 , that it lifts the ban imposed on the States against taxinginter-State sales and not that it validates or ratifies any such law.Considering the legislation on its substance, we have no doubt that it iswithin the scope of the authority conferred on Parliament by Art. 286(2) and isnot ultra vires.
35. It is next contended that the impugned Act is wholly retrospective incharacter in that it operates on sales which took place during the specifiedperiod, and that such a legislation is, having regard to the intendment of Art.286(2), outside its terms. It is argued that this Article, to start with,enacts a restriction on the power of the State to impose taxes on inter-Statesales and then vests in Parliament a power to remove that restriction, and thatin logical sequence therefore, there should first be a legislation byParliament authorising the States to impose a tax on inter-State sales and thena law of the State made in accordance therewith, and that that order havingbeen reversed in the present case, the impugned Act is unconstitutional. We donot agree with this contention. Article 286(2) merely provides that no law of aState shall impose tax on inter-State sales 'except in so far asParliament may by law otherwise provide'. It places no restrictions on thenature of the law to be passed by Parliament. On the other hand, the words'in so far as' clearly leave it to Parliament to decide on the fromand nature of the law to be enacted by it. What is material to observe is thatthe power conferred on Parliament under Art. 286(2) is a legislative power, andsuch a power conferred on a Sovereign Legislature carries with it authority toenact a law either prospectively or retrospectively, unless there can be foundin the Constitution itself a limitation on that power. Now, there is nothingexpress in Art. 286(2) imposing a restriction on the power of Parliament toenact a law with retrospective operation. But it is argued for the petitionersthat such a restriction is to be implied from the scheme of it, which is thatthere is prohibition on the power of the State to enact a law imposing tax oninter-State sales, unless Parliament lifts the ban, and it is said that aprohibition operates only in future and therefore a law removing thatprohibition must also operate in future. The decision of the Privy Council inPunjab Province v. Daulat Singh (1946) L.R. 73 IndAp 59 is relied on insupport of this proposition. There, the question arose with reference to thevalidity of a mortgage of agricultural lands in the Punjab executed in the year1933. Section 13-A of the Punjab Alienation of Land Act which came into forcein 1939 enacted that transfer of a land by a member of an agricultural tribe infavour of another member of the tribe was void if the transferee was abenamidar for a person who was not a member of that tribe, whether suchtransfer was made before or after the Act. The mortgagee instituted a suit,challenging the vires of this section on the ground that it contravened s.298(1) of the Government of India Act, 1935, which provided that no subject ofHis Majesty domiciled in India shall be prohibited from acquiring, holding ordisposing of property on ground only of religion, place of birth or descent.The mortgagor in reply relied on s. 298(2) which enacted that nothing in thatsection shall affect the operation of any law which prohibits the sale ormortgage of agricultural land situate in any particular area and owned by aperson belonging to the agriculturist class. In rejecting this contention, thePrivy Council observed that what was saved by s. 298(2) was a law prohibitingcertain kinds of transfers, that the word 'prohibition' couldproperly apply only to acts to be done in future, and that the impugnedprovision, s. 13-A, was intra vires the Constitutional provision in so far asit prohibited transfers after the date of its enactment, but to the extent thatit avoided transfers which had taken place prior to that date, it was ultravires. This decision proceeded solely on the connotation of the word'prohibits' in s. 298(2) of the Government of India Act, and can beof no assistance in the construction of Art. 286(2), wherein that word does notoccur. And even on the substance of it, we see no real analogy between the casein Punjab Province v. Daulat Singh (1946) L.R. 73 IndAp 59 and present. There,the law which was authorised by s. 298(2) was one prohibiting certaintransfers; here the law which Parliament is authorised to make is one notprohibiting the States from imposing tax on inter-State sales, but permittingthem to do so. While a law prohibiting transfers must be prospective, a lawauthorising imposition of tax need not be. It can be both prospective andretrospective.
36. A decision more directly in point is the one in The United Provinces v.Atiqa Begum  F.C.R. 110. There, the question arose on the constructionof s. 292 of the Government of India Act, 1935, which enacted that,
'Notwithstanding the repeal by this Act of theGovernment of India Act, but subject to the other provisions of this Act, allthe law in force in British India immediately before the commencement of PartIII of this Act shall continue in force in British India until altered orrepealed or amended by a competent Legislature or other competentauthority.'
37. The Legislature of the United Provinces had enacted a law modifying thepre-existing law relating to the payment of rents by tenants to landlords andgiving it retrospective operation. The question was whether the enactment wasrepugnant to s. 292 which had provided that the pre-existing law was tocontinue in force until it was altered. It was held that the power of alegislature to pass a law included a power to pass it retrospectively, and thatthe words of s. 292 did not operate to impose any restriction on that power,and that the legislation was intra vires. In our opinion, the principle of thisdecision is applicable to the present case, and the impugned Act cannot be heldto be bad on the ground that it is retrospective in operation.
38. It is next contended that the impugned Act is ultra vires, inasmuch asit is much more than a mere retrospective law, and that it is really a piece ofex post facto legislation, which is not authorised by Art. 286(2). The argumentin support of this contention may thus be stated : A State legislature iscompetent under Entry 54 in List II to enact a law taxing sale of goods, andwhen such a law is made to operate retrospectively it may not be open tochallenge on constitutional grounds, though its propriety may be open toquestion on grounds of policy. Parliament had no competence to enact laws inrespect of tax on sales falling within Entry 54 in List II, but Art. 286(2)confers on it a power to authorise the States to impose a tax on inter-Statesales. The impugned Act does not do that, but validates ex post facto laws ofStates imposing such a tax retrospectively for the specified period. Such ageneral law may be intra vires the States but not Parliament, nor is it onewhich can be justified by the power granted to it to 'provideotherwise.' It is therefore unconstitutional and void. In our opinion,this argument is only an amalgam of the two contentions already dealt with, anddoes not require further detailed consideration. The impugned Act, though it isin name a validating Act, is in essence a law lifting the ban under Art.286(2), and if no limitation on the character of that law could be spelt out ofthe language of that Article, then it must be upheld as within the authorityconferred by it.
39. It is also argued that even if the power to make a law conferred onParliament under Art. 286(2) comprehends a power to enact a law withretrospective operation, that power cannot extend to authorising what isunconstitutional, and that as s. 22 of the Madras Act and the correspondingprovisions in the statues of other States were unconstitutional and illegalwhen made as contravening the prohibition enacted in Art. 286(2), the impugnedAct must be held to be unauthorised and bad in that it seeks too give effect tothose provisions. But this is to beg the very question which we have to decide.If it is competent to the legislatures of the States to enact a law imposing atax on inter-State sales to take effect when Parliament so provides, there isnothing unconstitutional or illegal either in s. 22 of the Madras Act or in thecorresponding provisions in the Acts of other States. If conditionallegislation is valid, as we have held it is, then s. 22 is clearly intra vires,and the foundation on which this contention of the petitioners rests,disappears and it must fall to the ground. In the result, we are of opinionthat the impugned Act is intra vires, and is not open to challenge on any ofthe grounds put forward by the petitioners.
(III) (a). We have now to consider the contention that even if the impugnedAct is valid, that would not give efficacy to s. 22 of the Madras Act or thecorresponding provisions in the laws of other States which came in byadaptation under Art. 372(2). The ground urged in support of this contention isthat the expression 'law of a State' in Art. 286(2) has a technicalimport, and means a law which is enacted by the legislature of a State in themanner prescribed by the Constitution and open to challenge in courts if it isunconstitutional, that that expression occurring in s. 2 of the impugned Actmust bear the same meaning which it has in Art. 286(2) as it was enactedpursuant to the authority contained therein, and that s. 22 of the Madras Actis not a law of that description, as it was made by the President in exerciseof the special power conferred on him by Art. 372(2), and is, as providedtherein, not open to attack in a court of law.
40. We do not see why we should restrict the connotation of the words'law of a State' in the manner contended above. The law of Statesignifies, in its ordinary acceptation, whatever is an expression of thelegislative, as distinguished from the executive or judicial power of a State.Its normal mode under the Constitution is no doubt that is enacted by thelegislature of the State constituted in accordance with the procedureprescribed therein. But that is not the only mode in which the legislativepower of the State could be exercised. Under Art. 213, the Governor isauthorised, subject to the conditions laid down therein, to issue Ordinanceswhich have the force of law, and these Ordinances are clearly laws of the Stateand not the less so by reason of their not having been passed by the Statelegislature. Under Art. 252, it is open to Parliament acting on resolutions ofthe legislatures of two or more States, to enact laws on subjects which arewithin the exclusive competence of the States, a recent instance of suchlegislation being Act 42 of 1955, the validity of which was the subject ofconsideration in R.M.D. Chamarbaugwalla v. Union of India : 1SCR930 .Can it be contended that these are not laws of the States for which they wereenacted, because they were not passed by the legislatures of those States Weentertain on doubt that by the expression 'law of a State' in Art.286(2) and s. 2 of the impugned Act is meant whatever operates as law in thestate, and that s. 22 of the Madras Act is a law within those enactments. Nordoes it affect this conclusion that law may not be open to challenge in a courtof law. A right to challenge a law must depend on the provisions of theConstitution governing the matter, and if those provisions enact that it is notopen to question in a court of law or that it is liable to be questioned onlyon certain specified grounds, that will not have the effect of depriving astatute duly enacted of its character as law. We are also not satisfied that alaw as adapted under Art. 372(2) is not open to attack on the ground that itcontravenes some constitutional provision. We are disposed to think that theconcluding words of Art. 372(2) preclude an attack on the Adaptation Order onlyon the ground that it does more than merely bringing the State law intoconformity with the Constitution and is, in consequence, ultra vires the powersconferred by that article. In the result, we must hold that s. 22 of the MadrasAct is within the protection afforded by s. 2 of the impugned Act.
(III) (b) : The next contention of the petitioners that falls to beconsidered is whether even on the footing that the impugned Act is intra viresthe powers of Parliament under Art. 286(2), the proceedings which are proposedto be taken by the State of Andhra against them for assessment of tax areincompetent, because the Act validates only levies or collections made duringthe specified period but does not authorise the initiation of fresh proceedingsfor levy or collection of tax. It is contended that though s. 2 of the impugnedAct consists of two clauses, one giving effect to laws of States imposing taxon inter-State sales in so far as they look place during the specified periodand the other validating levy or collection of tax made during that period, thefirst clause has no independent operation, the only purpose which it servesbeing to lead up to the second which is the only effective clause in thesection. It is argued that if the intention of the legislature was not merelyto validate the levies or collections already made but also to maintain thelaws in force so as to enable the States to take fresh proceedings forassessment and levy of tax, then there was no need whatsoever for the secondclause, as effectuation of the Act would automatically validate the levies andcollections made thereunder. It is said that the object of the legislation wasonly to see that the States had not to refund amounts collected by them, andthat for achieving that object it was necessary only to given effect to thesecond clause. The decision in Dialdas v. P. S. Talwalkar A.I.R. 1957 Bom. 71already cited, was relied on as supporting the petitioners on this point.
41. In our judgment, the language of the enactment is too clear andunambiguous to admit of this contention. If the purpose of the enactment iswhat the petitioners contend it to be, then nothing would have been easier forthe legislature than to have so framed the section as to confine its operationto levies or collections already made, without giving effect to the law itself.On the contention of the petitioners, the first clause has to be discarded aswholly inoperative, and we should be loth to adopt a construction which leadsto that result. It is true that the contention of the State that the firstclause has independent operation the second clause would unnecessary, as evenwithout it, the result sought to be achieved by it must follow in the firstclause itself. But it is to be noted that the first clause has reference to theexercise of the legislative power while second is concerned with administrativeaction, and it is possible that the second clause might have been enacted byway of abundant caution. It is nothing strange or unusual for legislature toinsert a provision ex abundanti cautela, so as to disarm possible objection;but it is inconceivable that it should enact a provision which is whollyinoperative. Of two alternative constructions of which one leads to former andthe other involves the latter result, there cannot be any question that it isthe former that is it be preferred. Nor is it permissible to cut down the plainmeaning of the terms of the statute on consideration of policy behind thelegislation. But even from that point of view, there was the fact that therewere dealers who had collected taxes from their purchasers for payment to theState, but were relieved of that obligation by the judgment in The BengalImmunity Company case : 2SCR603 and that, further, to validate onlylevies and collections made would give an advantage to those who evaded the lawas then understood, over those who loyally obeyed it. It follows that we areunable to agree with the decision in Dialdas v. P. S. Talwalkar [A.I.R. 1957Bom. 71], in so far as it held that it was not competent to the State to startfresh proceedings for assessment tax on the strength of the impugned Act. In ouropinion, the true construction of s. 2 is that the two clauses therein are, asindicated by the conjunction, distinct and independent in their operation, andthat the laws of the States are kept in force in respect of sales which hadtaken place during the specified period, and that proceedings in respectthereof for assessment are within the protection of the Act.
42. It was next argued that the impugned Act is a temporary statute, as itsoperation is limited to sales which took place during the specified period, andthat period having expired, no proceedings could now be taken on the strengthof the provisions of that Act, and reliance was placed on the observations ofthis Court in Keshavan Madhava Menon v. The State of Bombay : 1951CriLJ680 ,235], in support of this position. But the impugued Act is in no sense atemporary Act. Its life is not limited to any specified period. It is apermanent statute operating on all sales which took placed during the specifiedperiod. The fallacy in this contention of the petitioners lies in mixing up theperiod, the sales during which are brought within the operation of the Act,with the period of the operation of the Act itself. The former may be said tobe temporary, but the latter clearly is not.
(IV) It is next contended that even if the impugned Act authorised startingof fresh proceedings for assessment of tax on the Explanation sales which hadtaken place during the specified period, no action in that behalf could betaken under s. 22 of the Andhra (Madras) Act, because it was, when it wasenacted, repugnant to Art. 286(2) of the Constitution, and was therefore void.It is argued that a statute which is unconstitutional is a nullity and must betreated as non est and that the impugned Act could not infuse life into it. Itmay be open, it is said, to the Legislature of the State of Andhra to enact afresh law giving it even retrospective operation as provided in the impugnedact, but in the absence of such legislation, the provisions of the Act as theystood prior to the impugned Act are incapable of enforcement. It would besufficient answer to this answer to this contention that s. 22 of the MadrasAct is only a piece of conditional legislation, imposing tax on inter-Statesales which Parliament should enact a law lifting the ban, and if suchlegislation is competent as we have held it is, then no question ofunconstitutionality of the section when it was enacted could arise. But itwould be more satisfactory to decide the point on its own merits, as the questionraised has been, of late, the subject of considerable discussion in this Court.
43. Now, in considering the question as to the effect of unconstitutionalityof a statute, it is necessary to remember that unconstitutionality might ariseeither because the law is in respect of a matter not within the competence ofthe legislature, or because the matter itself being with its competence, itsprovisions of end some constitutional restrictions. In a Federal Constitutionwhere legislative powers are distributed between different bodies, thecompetence of the legislature to enact a particular law must depend uponwhether the topic of that legislation has been assigned by the Constitution Actto that legislature. Thus, a law of the Station an Entry in List 1, Sch. VII ofthe Constitution would be wholly incompetent and void. But the law may be on atopic within its competence, as for example, an Entry in List II, but it mightinfringe restrictions is imposed by the Constitution on the character of thelaw to be passed, as for example, limitations enacted in Part III of theConstitution. Here also, the law to the extent of the repugnancy will be void.Thus, a legislation on a topic not within the competence of the legislature anda legislation within its competence but violative of constitutional limitationhave both the same reckoning in a court of law; they are both of themunenforceable. But does it follow from this that both the laws are of the samequality and character, and stand on the same footing for all purposes Thisquestion has been the subject of consideration in numerous decisions in theAmerican Courts, and the preponderance of authority is in favour of the viewthat while a law on a matter not within the competence of the legislature is anullity, a law on a topic within its competence but repugnant to theconstitutional prohibitions is only unenforceable. This distinction has amaterial bearing on the present discussion. If a law is on a field not withinthe domain of the legislature, it is absolutely null and void, and a subsequentcession of that field to the legislature will not have the effect to breathinglife into what was a still-born piece of legislation and a fresh legislation onthe subject would be requisite. But if the law is in respect of a matterassigned to the legislature but its provisions disregard constitutionalprohibitions, though the law would be unenforceable by reason of thoseprohibitions, when once they are removed, the law will become effective withoutre-enactment.
44. Willoughby on the Constitution of the United States, Vol. I, at p. 11says :
'The validity of a statuteis to be tested by the constitutional power of a legislature at the time of itsenactment by that legislature, and, if thus tested it is beyond the legislativepower, it is not rendered valid, without re-enactment, if later, byconstitutional amendment, the necessary legislative power granted.
However, it has been held thatwhere an act is within the general legislative power of the enacting body, butis rendered unconstitutional by reason of some adventitious circumstance, asfor example, when a State legislature is prevented from regulating a matter byreason of the fact that the Federal Congress has already legislated upon thatmatter, or by reason if its silence is to be construed as indicating that thereshould be no regulation, the act dose not need to be re-enacted in order to beenforced, if this cause of its unconstitutionality is removed.'
45. In Cooley on Constitutional Law at p. 201, it is stated that 'afinding of unconstitutionality does not destroy the statute but merely involvea refusal enforce it'. In Wilkerson v. Rahrer (1891) 140 U.S. 545, the State of Kansas had enacted a law in 1889 forbidding the saleof intoxicating liquor. This was bad in so far as it related to sales in thecourse of inter-State trade, as it was in contravention of the Commerce Clause.But in 1890, the Congress passed a law conferring authority on the States toenact prohibition laws. The question was whether a prosecution under the law of1889 in respect of a breach of that law subsequent to the Congress legislationin 1890 was maintainable. Repelling the contention that the statute of 1889 wasa nullity when it was passed and could not be enforced without re-enactment,the Court observed :
'This is not the case of a law enacted in theunauthorized exercise of a power exclusively confided the Congress, but of alaw which it was competent for the State to pass, but which could not operateupon articles occupying a certain situation until the passage of the Act ofCongress. That Act in terms removed the obstacle, and we perceive no adequateground for adjudging that a re-enactment of the state law was required beforeit could have the effect upon imported which it had always had upon domesticproperty.'
46. It should be noted that in this case the law of 1889 applied tointra-State sales also, and it was admittedly valid to that extent. Theimpugned legislation was therefore unconstitutional only in part. Rottschaferafter referring to the conflict of authorities on this question in the States,refers to the decision in Wilkerson v. Rahrer (1891) 140 U.S. 545 as embodying the better view. Vide American Constitutional Law, 1939 End.p. 39.
47. A similar view was taken in Ulster Transport Authority v. James Brown& Sons Ltd. (1953) Northern Ireland Reports 79. There, construing s. 5(1)of the Act of 1920 which enacts that 'any law made in contravention of therestrictions imposed by this sub-section shall so far as it contravenes theseretractions, be valid', Lord Mac Dermott L. C.J. observed :
'I am not aware of any authority for the view thatlanguage such as this necessarily means that contravention must produce anactual gap in the statute book in the sense that the measure concerned, or somespecific part thereof, simple drops out of the authorized text. As well as thisvertical severability, if I may so describe it, I see no reason why, if thecircumstances warrant such a course, the term of section 5(1) should not besufficiently met by what I may call a horizontal severance, a severance that iswhich, without excising any of the text, removes from its ambit some particularsubject-matter, activity or application. This, I think, would give effect tothe words 'so far as it contravenes' without impugning on the meaning or weightto be attached to the word 'void'.'
48. It will be noted that this decision also deals with a statute which wasin part unconstitutional.
49. Coming to the authorities of this Court where this question has beenconsidered : In Behram Khurshed Pesikaka v. The State of Bombay : 1955CriLJ215 the question arose with reference to the Bombay ProhibitionAct of 1949 which, subject to certain exceptions provided therein, prohibitedthe consumption of liquor. In The State of Bombay and another v. F. N. Balsara : 2SCR682 this Court had hale that this provision was obnoxious toArt. 19(1)(g) of the Constitution in so far as it related to medicinal andtoilet preparations containing alcohol. The appellant was prosecuted for theoffence of consuming liquor, and his defence was that he had taken medicinecontaining alcohol. The point in dispute was whether the burden was upon theappellant to prove that he had taken such a medicine or for the prosecution toshow that he had not. This Court held that the onus was on the prosecution, andthe same not having been discharged, the appellant was entitled to beacquitted. In the course of the judgment, Mahajan C.J. made the followingobservations, which are relied on by the petitioners :
'The constitutional invalidity of a part of section13(b) of the Bombay Prohibition Act having been declared by this Court, thatpart of the section ceased to have any legal effect in judging cases ofcitizens and had to be regarded as null and void in determining whether acitizen was guilty of an offence.'
50. It must be observed that the question of the constitutionality of theAct did not arise directly for determination was incidentally discussed asbearing on the incidence of burden of proof. And further, these observationshave reference to the enforceability of the provisions of the BombayProhibition Act, while the bar under Art. 19 continued to operate. There was noquestion of the lifting of ban imposed by Art. 19, and the question as to theeffect of lifting of a ban did not arise for decision. In the contest in whichthey occur, the words 'null and void' cannot be construed as implyingthat the impugned law must be regarded as non est so as to be incapable oftaking effect, when the bar is removed. They mean nothing more then the Act isunenforceable by reason the of bar.
51. In A.V. Fernandez v. State of Kerala : 1SCR837 the questionarose with reference to the Travancore-Cochin General Sales tax Act and theRules made thereunder. Prior to the Constitution, the assessees were liable topay tax on the total turnover of sales including those inside the State andthose outside the State. Where the sales were of coconut oil, there was aprovision for deduction of the price paid for the purchase of copra from thetotal turnover. After the coming into force of the Constitution, anew section,s. 26, corresponding to s. 22 of the Madras Act, was introduced incorporatingtherein the provisions of Art. 286, and consequent thereon, the sales whichtook place outside the State were excluded from the turnover. On this, aquestion arose as to the quantum of deduction to which the assessee wasentitled in respect of his purchase of copra. He claimed that he was entitledto deduct the price paid for copra not only in respect of oil which was soldinside the State but also oil sold outside the State. This contention wasrejected by the High Court, which limited the deduction to purchase of coprarelating to the sales inside the State, and in affirming that decision, thisCourt observed :
'In our opinion, section 26 of the Act, in casesfalling within the categories specified under Article 286 of the Constitutionhas the effect of setting at nought and of obliterating in regard thereto theprovisions contained in the Act relating to the imposition of tax on the saleor purchases of such goods and in particular the provisions contained in thecharging section and the provisions contained in rule 20(2) and otherprovisions which are incidental to the process of levying such tax. So, far assales falling within the categories specified in Article 286 to theConstitution and the corresponding section 26 of the Act, are concerned, theyare, as it were, taken out of the purview of the Act and no effect is to begiven to those provisions which would otherwise have been applicable if section26 had not been added to the Act.'
52. On the strength of the above observations, the petitioners contend thatthe provisions relating the inter-State sales must be treated as non-existent,and that, therefore, a fresh enactment of the statute would be necessary tobring them into operation. Here again, the point for decision was only as tothe effect of the ban under Art. 286 on the transactions which came within itspurview. That ban had not then been lifted and the effect of the lifting ofsuch a ban on the existing law did not fall to be considered. We are unable toread the observations, relied on by the petitioners as implying that s. 22 ofthe Madras Act must be taken to the have been blotted out of the statute book.
53. A case directly in point isBhikaji Narayan Dhakras and others v. TheState of Madhya Pradesh and another : 2SCR589 . There, the questionarose with reference to the C.P. & Berar Motor Vehicles (Amendment) Act,1947 (Act 3 of 1948). That Act had amended s. 43 of the Motor Vehicles Act,1939, by introducing provisions which authorised the Provincial Government 'totake up the entire motor transport business in the Province and run it incompetition with and even to the exclusion of motor transport operators'.These provisions, though valid at the time when they were enacted, became voidon the coming into force of the Constitution as infringing the rights ofcitizens to carry on business, protected by Art. 19(1)(g). The Constitution,however, was amended on June 18, 1951, and Art. 19(6) was amended so as toauthorise the State to carry on business 'to the exclusion, complete orpartial, of citizens or otherwise'. Subsequent to this amendment, theGovernment issued a notification under s. 43 of the Amendment Act of 1948, andit was the validity of that notification that was in issue. The contention wasthat as s. 43 of the Act of 1948 had become void at the date of theConstitution, a notification issued by the Government under that section afterthe date of the amendment of the Constitution was not valid, as it must betaken to have become non est. It was held by this Court that s. 43 of the Actof 1948 could not be held to have been effaced out of the statute book, becauseit continued to operate on transactions prior to the coming into force of theConstitution, and that even after the Constitution, it would be operative as againstnon-citizens, that the consequence of s. 43 being repugnant to Art. 19(1)(g)was that it could not be enforced so long as the prohibition contained thereinwas in force, but that when once that prohibition had been removed as it was bythe First Amendment, the provisions of than Act which had been dormant all thetime became, active and enforceable.
54. The result of the authorities may thus be summed up : Where an enactmentis unconstitutional in part but valid as to the rest, assuming of course thatthe two portions are severable, it cannot be held to have been wiped out of thestatute book as it admittedly must remain there for the purpose of enforcementof the valid portion thereof, and being on the statute book, even that portionwhich is unenforceable on the ground that it is unconstitutional will operateproprio vigore when the Constitutional bar is removed, and there is no need fora fresh legislation to give effect thereto. On this view, the contention of thepetitioners with reference to the Explanation in s. 22 of the Madras Act mustfail. The Explanation operates, as already stated, on two classes oftransactions. It renders taxation of sales in which the property in the goodspasses in Madras but delivery takes place outside Madras illegal on the groundthat they are outside sales falling within Art. 286(1)(a). It also authorisesthe imposition of tax on the sales in which the property in the goods passesoutside Madras but goods are delivered for consumption within Madras. It isvalid in so far as it prohibits tax on outside sales, but in valid in so far assales in which goods are delivered inside the State are concerned, because suchsales are hit by Art. 286(2). The fact that it is invalid as to a part has notthe effect of obliterating it out of the statute book, because it is valid asto a part and has to remain in the statute book for being enforced as to thatpart. The result of the enactment of the impugned Act is to lift the ban underArt. 286(2) and the consequence of it is that that portion of the Explanationwhich relates to sales in which property passes outside Madras but the goodsare delivered inside Madras and which unenforceable before, become valid anenforceable. In this view, we do to feel called upon to express any opinion asto whether it would make any difference in the result if the impugned provisionwas unconstitutional in its entirety.
55. There is one other aspect of the question to which reference must bemade. The decisions in Behram Khurshed Pesikaka v. The State of Bombay : 1955CriLJ215 and Bhikaji Narain Dhakras and others v. The State of MadhyaPradesh and another : 2SCR589 both turn on the construction of Art.13 of the Constitution, which enacts that laws shall be void to the extent theyare repugnant to the provisions of Part III. We are concerned in thesepetitions not with infringement of any of the provisions of Part III but ofArt. 286(2), and the point for our decision is as to the effect of theinfringement of that provision. Art 286(2) does not provide that a law whichcontravenes, it is void, and when regard is to the context of the provision, itis difficult to draw the inference that that is the consequence ofcontravention of that provision. Art. 372(1) provides for the continuance inforce of all laws existing at the date of the Constitution. The proviso to Art.286(2) enacts that the President may by an order continue the operation of theSales Tax Laws up to March 31, 1951, and Art. 286(2) itself enacts that no lawof a law of a State shall impose a tax. In the context in which they occur, thetrue meaning to be given the these words is, as already observed, that no lawof a State shall be effective to impose a tax; that is to say, the law cannotbe enforced in so far as it imposes such a tax. Whether we consider thequestion on broad principles as to the effect of unconstitutionality of astatute or on the language of Art. 286(2), the conclusion is inescapable thats. 22 of the Madras Act and the corresponding provisions in the other statutescannot be held to be null and void and non est by reason of their beingrepugnant to Art. 286(2) and the bar under that Article having been nowremoved, there is no legal impediment to effect being given to them.
(V) We shall now deal with the contention of the learned counsel for theMadura Mills Ltd., who struck a new path cutting across the lines on which thepetitioners and the other interveners proceeded. He contended that the decisivefactor in the determination of the question was Entry 42 in List I of theSeventh Schedule, 'Inter-State trade and commerce,' that under that Entry,Parliament had the exclusive power to enact laws in respect of inter-Statetrade and commerce and that included power to impose a tax on inter-Statesales, that the States had therefore no competence under the Constitution toenact a law imposing tax on such sales, that the laws passed by the Statesafter the Constitution imposing such a tax were ultra vires and void, that theimpugned Act purporting to give effect to such laws was likewise ultra viresand inoperative, an that, in consequence, the proceedings sought to be takenunder s. 22 of the Madras Act and the corresponding provisions in the sisterActs of other States were unauthorised and illegal. The argument in support ofthis contention was as follows : Entry 42 in List I is based on the CommerceClause of the American Constitution, Art. 1, s. 8 that 'The Congress shallhave power to regulate commerce among the several States', and that hasbeen interpreted by the Supreme Court of the United States as meaning that theStates have no power to enact a law imposing a tax on the carrying on ofinter-State trade (Vide Robins v. Taxing District of Shelby County (1887) 120U.S. 489, or imposing tax on inter-State sales (Vide McLeod v.Dilworth Co. (1944) 322 U.S. 327. The contents of Entry 42are the same as those of the Commerce Clause, and it must therefore beconstrued as of the same effect. It is also well-established rule ofconstruction that the Entries in the Legislative Lists must be interpretedliberally and in a wide sense. The true interpretation therefore to be put uponEntry 42 is that Parliament has, and therefore, in view of the non-obstanteclause in Art. 246(1) and of the words 'subject to' in Art. 246(3),the States have not, the power to impose tax on inter-State sales. Article 301which provides that trade and commerce in the territory of India shall be freeis also intended achieved the same result. It reproduces s. 92 of theCommonwealth of Australia Constitution Act, and the authorities on that sectionhave held that imposition of a tax on inter-State trade would be obnoxious tothat provision. That the freedom in Art. 301 includes freedom from taxation isalso implicit in Art. 304(a) in which an exception to Art. 301 is made inrespect of the imposition of tax on goods imported from other States. Theresult is, it is argued, that after the Constitution on law of a State canimpose a tax on inter-State sales, an in to consequence, s. 22 of the MadrasAct, which come into force after the Constitution, would, if it is construed asimposing a tax, be bad, and the impugned Act. which proceeds on the view thatthe States have the power to enact laws imposing a tax on inter-State sales andseeks to give effect to them would also be unconstitutional and void.
56. This contention suffers, in our opinion, from serious infirmities. Itoverlooks that out Constitution was not written on a tabular rasa, that afederal Constitution had been established under the Government of India Act,1935, and though that has undergone considerable change by way of repeal,modification and addition, it still remains the framework on which the presentConstitution is built, and that the provisions of the Constitution mustaccordingly be read in the light of the provisions of the Government of IndiaAct. It fails to give due weight to the setting of the relevant provisions ofthe Constitution and the interpretation which is to be put upon them in theircontext. In the Government of India Act, 1935, there was no Entry correspondingto Entry 42 in List I of the Constitution. But there was in List II, Entry 48which corresponds to Entry 54 in the Constitution. It is not in dispute thatunder Entry 48 the States had power to pass a law imposing a tax on inter-Statesales, because the terms of the Entry are wide and would include inter-State aswell as inter-State sales. It was on this view that the Provinces had enactedlaws imposing tax on inter-State sales. Then the Constitution came into force,and it included for the first time a new Entry 42 in List I. It also reproducedEntry 48 in Entry 54 in List II in terms, for our purposes, identical. Havingregard to the connotation of that Entry in the Government of India Act, 1935,one would have expected that if it was intended by the Constitution-makers thatthe States should be deprived of the power to tax inter-State sales which theyhad under Entry 48 in the Government of India Act, that would have been madeclear in the Entry itself. It is material to note that while Entry 48 in theGovernment of India Act was 'Taxes on the sale of goods and onadvertisement', Entry 54 in List II of the Constitution as originallyenacted was 'Taxes on the sale or purchase of goods other thannewspapers'. Thus, the Constitution did limit the scope of Entry 48 by excludingfrom it newspapers, and if it was its intention to exclude inter-State salesfrom its purview, nothing would have been easier for it than to have said so,instead of leaving that result to be inferred on a construction of Entry 42 inList I in the light of the American authorities on the Commerce Clause. This isstrong indication that Entry 42 is not to be read as including tax oninter-State sales. This conclusion is further strengthened, when regard is hadto the scheme of the Lists in the Seventh Schedule and the principle underlyingthe enumeration of heads of legislation therein.
57. In List I, Entries 1 to 81 mention the several matters over whichParliament has authority to legislate. Entries 82 to 92 enumerate the taxeswhich could be imposed by a law of Parliament. An examination of these twogroups of Entries shows that while the main subject of legislation figures inthe first group, a tax in the relation thereto is separately mentioned in thesecond. Thus, Entry 22 in List I is 'Railways,' and Entry 89 is'Terminal taxes on goods or passings, carried by railway, sea or air;taxes on railway fares and freights'. If Entry 22 is to be construed asinvolving taxes to be imposed, then Entry 89 would be superfluous. Entry 41 mentions'Trade and commerce with foreign countries; import and export acrosscustoms frontiers'. If these expressions are to be interpreted asincluding duties to be levied in respect of that trade and commerce, then Entry83 which is 'Duties of customs including export duties' would bewholly redundant. Entries 43 and 44 relate to incorporation, regulation andwinding up of corporations. Entry 85 provides separately for Corporation tax.Turning to List II, Entries 1 to 44 form one group mentioning the subjects onwhich the States could legislate. Entries 45 to 63 in that List form anothergroup, and they deal with taxes. Entry 18, for example, is 'Land' andEntry 45 is 'Land revenue'. Entry 23 is 'Regulation ofmines' and Entry 50 is 'Taxes on mineral rights'. The above analysis- and it is not exhaustive of the entries in the Lists - leads to the inferencethat taxation is not intended to be comprised in the main subject in which itmight on an extended construction be regarded as included, but is treated as adistinct matter for purposes of legislative competence. And this distinction isalso manifest in the language of Art. 248, Cls. (1) and (2), and of Entry 97 inList I of the Constitution. Construing Entry 42 in the light of the abovescheme, it is difficult to resist the conclusion that the power of Parliamentto legislate on inter-State trade and commerce under Entry 42 does not includea power to impose a tax on sales in the course of such trade and commerce.
58. Article 286 has a direct bearing on the point now under discussion. Itimposes various restrictions on the power of the State to enact laws imposingtaxes on sale of goods and one of those restrictions has reference to taxes oninter-State sales, vide Art. 286(2). It is implicit in this provision that itis the States that have got the power to impose a tax on such sales, as therecan be no question of a restriction on what does non exist. That is how Art.286(2) has been construed by this Court both in The United Motors case and inThe Bangle Immunity Company case. It was observed there in that under Entry 54,as under Entry 48 of the Government of India Act, the power to tax sales restedwith the States, and that Art. 286(2)was enacted with the object of avoidingmiltiple taxation of inter-State sales in exercise of the power conferred bythat Entry. This again strongly supports the conclusion that Entry 54 must beinterpreted as including the power to tax inter-State sales and Entry 42 asexcluding it.
59. In order to get over this hurdle, learned counsel put forward thecontention that Art. 286(2) had reference only to laws which were in existenceat the time when the Constitution came into force, and that the power given toParliament was one to continue those laws. Reference was made to the proviso toArt. 286(2) which authorised the President to direct that the taxes which werebeing levied by the State before the commencement of the Constitution might becontinued too be levied until March 31, 1951, and it was said that the powerconferred under Art. 286(2) was of the same character, and that it merelyenabled Parliament to continue per-Constitution laws.
60. Now, it cannot be disputed the language of Art. 286(2) would, in terms,comprehend future legislation. Language similar to the one used in Art. 286(2)is also to be found in Art. 287, and there, it clearly has reference to laws tobe enacted after the Constitution. Indeed, it was conceded that on the wordingof Art. 286(2) both existing and future legislation would be included. But itwas contended that its operation should be limited to existing laws, because asEntry 42 in List I includes tax on inter-State sales, any law of the Statesubsequent to the Constitution imposing such a tax would be incompetent. This,however, is petitio principii. The point for decision is whether tax oninter-State sale is included within Entry 42. The inference to be drawn fromthe plain language of Art. 286(2) is that is not. It is not answer to this tosay that Entry 42 includes it, and that, therefore, the meaning of Art. 286(2)should be cut down. We cannot accede to such a contention.
61. To sum up : (1) Entry 54 is successor to Entry 48 in the Government ofIndia Act, and it would be legitimate to construe it as including tax on interState sales, unless there is anything repugnant to it in the Constitution, andthere is none such. (2) Under the scheme of the Entries in the Lists, taxationis regarded as a distinct matter and is separately set out. (3) Article 286(2)proceeds on the basis that it is the States that have the power to enact lawsimposing tax on inter-State Sales. It is a fair inference to draw from theseconsiderations that under Entry 54 in List II the States are competent to enactlaws imposing tax on inter-State sales.
62. We must now consider the arguments that have been put forward assupporting the opposite conclusion. It is firstly contended that the Entries inthe Legislative Listed must be construed broadly and not narrowly or in apedantic manner, and that, in accordance with this principle, Entry 42 shouldbe construed, there being no limitation contained therein, as inclusive of thepower to tax sales in inter-State trade and commerce. The rule of constructionrelied on is no doubt well-established; but the question is as to theapplication of that rule in the present case. The question here is notsimpliciter whether a particular piece of legislation falls within an Entry ornot. The point in dispute before us is whether between two Entries assigned totwo different Legislatures the particular subject of Legislation falls withinthe ambit of the one or the other. It Entry 42 in List I is to be construedliberally, so must Entry 54 in List II be, and the point is not settled byreference to Art. 246, Cls. (1) and (3) and to the principle laid down in UnionColliery Company of British Columbia v. Bryden that where there is a conflictof jurisdiction between a Central and a Provincial Legislature, it is the lawof the Center that must prevail. Art. 246, Cls. (1) and (3) have to be invokedonly if there is a conflict as to the scope of two Entries in the two Lists andnot otherwise. What has therefore first to be decided is whether there is anyconflict between Entry 42 in List I and Entry 54 in List II. I there is not,the application of the non-obstante clause in Art. 246(1) or of the words'subject to' in Art. 246(3) does not arise.
63. There is another rule of construction also well-settled that the Entriesin two Legislative Lists must be construed if possible so as to avoid aconflict. In Province of Madras v. Boddu Paidanna and Sons the question was asto whether the first sales by manufacturer of goods were liable to be taxed bythe Province under Entry 48 in List II, or whether it was really a tax onexcise which was within the exclusive competence of the center under Entry 45in List I. It was held by the Federal Court that the correct approach to thequestion was to see whether it was possible to effect a reconciliation betweenthe two Entries so as to avoid a conflict and overlapping, and that, in thatview, though excise duty might in an extended sense over the first sales by themanufacturer, in the context of entry 48 in List II it should be held not toinclude it, and that therefore the Province had the right to tax the firstsales. This view was approved by the Privy Council in Governor-General inCouncil v. Province of Madras (1945) L.R. 72 IndAp 91. If it is possibletherefore to construe Entry 42 as not including tax on inter-State sales, thenon the principle enuciated in Province of Madras v. Boddu Paidanna and Sons(1942) F.C.R. 90 and Governor-General in COuncil v. Province of Madras 1945)L.R. 72 IndAp 91 we should construe it, as that will avoid a conflict betweenthe two Entries.
64. It was also argued in support of the contention that Entry 42 in List Imust be held to include the power to tax, that was in interpretation put by theAmerican authorities on the Commerce Clause, and that there was no reason why adifferent construction should be put on Entry 42 in List I of our Constitution.It is true that our Constitution - makers had before them the Commerce Clauseand the authorities thereon, but it is a mistake to suppose that they intendedto bodily transplant that clause in Entry 42. We had in the Government of IndiaAct, 1935, a fullfledged Federal Constitution in force in this Country, andwhat the Constitution-makers did was to draw from other Federal Constitution ofthe world, adapt modify the provisions so as to suit our conditions and fitthem in our Constitution. It this new context, those provisions do notnecessarily mean what they meant in their old setting. The threads were nodoubt taken from other Constitutions, but when they were woven into the fabricof our Constitution, their reach and their complexion underwent changes.Therefore, valuable as the American decisions are as showing how the questionis dealt with in a sister Federal Constitution, great care should be taken inapplying them in the interpretation of our Constitution. We should not forgetthat it is our Constitution that we are to interpret, and that interpretationmust depend on the context and setting of the particular provision which has tobe interpreted. Applying these principles and having regard to the featuresalready set out, we must hold that Entry 42 in List I is not to be interpretedas including taxation. The same remarks apply to the argument based upon s. 92of the Commonwealth of Australia Constitution Act and Art. 301 of ourConstitution. We should also add that Art. 304(a) of the Constitution cannot beinterpreted as throwing any light on the scope of Art. 301 with reference tothe question of taxation, as it merely reproduces s. 297(1) (b) of theGovernment of India Act, and as there was no provision therein corresponding toArt. 301, s. 297(1) (b) could not have implied what is no sought to be inferredfrom Art. 304 (a).
65. In the result, we are of opinion that if the States had the power underEntry 54 to impose a tax on inter-State sales subject any to the restrictionenacted in Art. 286(2). Then by virtue of the impugned Act such law is renderedoperative and proceedings taken there under are valid. We have reached thisconclusion on a construction of the statutory provisions bearing on thequestion without reference to the Sixth Amendment of the Constitution which,proceedings on the view that the States had the power to tax inter-State salesunder Entry 54, has amended the Constitution, and has vested the power to taxinter-State sales in the center.
(VI) Another contention urged by the petitioners is that the levy of taxproposed to be made by the Andhra State on the sale of yarn by them to dealersin the State of Andhra is illegal, because under the Madras Act and the Rulesmade thereunder, where there are successive sales of yarn the tax can beimposed at only one point, and as the Government of Madras had already imposeda tax on the sale within that State, a second levy on the self - same goods bythe State of Andhra is unauthorised, and that therefore the threatened proceedingsfor assessment are incompetent. This contentions is clearly untenable. When theMadras Act provides for a single levy on successive sales of yearn, it can haveonly application to sales in the State of Madras, as it would be incompetent tothe Legislature of Madras to enact a law to operate in another State. But it isargued that s. 53 of the Andhra State Act, 1953, on its true interpretationenacts that though for political purposes Andhra is to be regarded as aseparate State, for the enforcement of laws as they stood on that date itshould be deemed to be a part of the State of Madras. We do not agree with thisinterpretation. In our opinion, s. 53 merely provides that the laws inexistence in the territories which were constituted into the State of Andhrashould continue to operate as before. In fact, by an Adaptation Order issued onNovember 12, 1953, even the name of Andhra was substituted for Madras in theMadras general Sales Tax Act. There is no substance in this contention.
(VII) Lastly, it is argued that the Essential Commodities Act enacted byParliament in exercise of the power conferred by Art. 286(3) has declared thatyarn is an essential commodity, and that if the Madras Act is to be construedas a fresh enactment for the Andhra State by reason of Sections 53 and 54 of theAndhra State Act and the Adaptation Order dated November 12, 1953, then itwould be bad inasmuch as the procedure prescribed in that provision had notbeen followed. The basis of this contention is that the Madras Act as appliedto the Andhra State is a new Act for purposes of Art. 286(3), but that is notso. The Madras Act was in force in the territories which new form part of theAndhra State until October 1, 1953, and thereafter that Act continues to be inoperation by force of s. 53 of the Andhra State Act. Moreover, the Madras Actbecame operative in the new State of Andhra not under any law passed by theLegislature of the State of Andhra but under s. 53 of a law enacted byParliament and therefore Art. 286(3) has no application. We should add that theEssential Commodities Act (LII of 1952) has itself been repealed and is nolonger in operation. This contention of the petitioners also should berejected.
66. The petitioners sought to raise certain other contentions such as thatthey are not 'dealers' in the Andhra State, and that the Explanationto s. 22 had no application to the sales sought to be taxed, as the goods weredelivered not in the State of Andhra but in Madras. But these are questionswhich ought properly to be raised before the assessing authorities, and cannotbe gone into in these proceedings.
67. In the result, the petitions fail and are rejected. The petitions havehad a chequered career, their fortunes fluctuating with changes in theinterpretation of the law and in the law itself. In the circumstances, wedirect the parties to bear their own costs.
68. The petitioners who are dealers in cotton yarn carrying on business inthe city of madras had sold goods to various persons in the State of Andhra.This State, the respondent in these petitions, demanded taxes on these salesunder the provisions, of the Sales Tax Act applying to its territories. Thepetitioners challenged the respondent's right to tax the sales, and filed thesepetitions for writs of prohibition or other suitable writs restraining therespondent from levying and collecting the tax. The Act mentioned various kindsof sales which could be taxed under it. The procedures followed by thepetitioners in effecting the sales were diverse and have not yet beenascertained, and it is not possible without such ascertainment to decidewhether they are or are not taxable under the provisions of the Act read withother relevant laws. To avoid this difficulty it has been agreed between theparties that the only question that will be decided on these petitions iswhether the respondent can tax a sale under which the property in the goodssold passed outside the State of Andhra but the goods were delivered in thatState for consumption there. Before proceeding to discuss this question it isnecessary to refer to certain antecedent events.
69. On January 26, 1950, the Constitution of the India was promulgated. Itcontained the laws previously in force in the territories of India subject toits provisions. Article 372(2) of the Constitution provides that,
'For the purpose of bringing the provisions of anylaw in force into the territory of India into accord with the provisions ofthis Constitution, the president may by order make such adaptations andmodifications of such law, whether by way of repeal or amendment, as may benecessary or expedient.'
70. Article 286 of the Constitute as it stood prior to its amendment in1956, that being what this case is concerned with, contained the followingprovisions :
'Art. 286. (1) No law of aState shall impose, or authorise the imposition of, a tax on the sale orpurchase of goods where such sale or purchase takes place -
(a) outside the State; or
(b) in the course of the importof the goods into, or export of the goods out of, the territory of India.
Explanation. - For the purposesof sub-clause (a), a sale or purchase shall be deemed to have taken place inthe State in which the goods have actually been delivered as a direct result ofsuch sale or purchase for the purpose of consumption in that State,notwithstanding the fact that under the general law relating to sale of goodsthe property in the goods has by reason of such sale or purchase passed inanother State.
(2) Except in so far asParliament may by law otherwise provide, no law of a State shall imposes, orauthorise the imposition of, a tax on the sale or purchase of any goods wheresuch sale or purchase takes place in the course of inter-State trade orcommerce :'
71. In the year 1939 the legislature of Madras had enacted the MadrasGeneral Sales Tax Act and this was continued in force by the Constitution afterits promulgation. In order to bring its provisions into accord with theConstitution, the President under his power mentioned earlier, passed on July2, 1952, the Adaptation of Laws (Fourth Amendment) Order which added a newsection to the Madras Act, being s. 22. The terms of this section are importantin this case and will be set out later.
72. The effect of the Explanation in Art. 286(1) (a) came up forconsideration by this Court in the case of The State of Bombay v. The UnitedMotors (India) Ltd. This Court held by its judgment pronounced by a majority,on March 30, 1953, that a State could tax a sale under which goods weredelivered within its territories for consumption there though the property inthe goods passed beyond its territories and a provision in a State statutepurporting to levy such a tax did not contravene Art. 286.
73. Andhra is a new State which came into existence on October 1, 1953. Itwas created by the Andhra State Act, 1953, largely out of territoriespreviously belonging to the state of Madras. Later, the new state came to bedesignated as the State of Andhra Pradesh but I will refer to it as the Stateof Andhra or simply Andhra. Section 53 of the Andhra State Act provided thatthe laws in force prior to the Constitution of the State of Andhra in theterritories included in it, were thereafter to continue in force there. TheMadras General Sales Tax Act therefore become applicable to the State of Andhraand it became so applicable with new s. 22 previously added to it.Subsequently, the Madras Act as applying in the State of Andhra was, to suitthe latter State, adapted by substituting for the name Madras the name Andhrawherever it occurred in that Act. I will hereafter call this Act the Sales TaxAct.
74. Sometime in the years 1954 the respondent, the State of Andhra, issuednotices to the petitioner demanding taxes under its Sales Tax Act. As I haveearlier stared the petitioners challenged the right of the respondent to levythe tax and certain correspondence followed. As the respondent insisted oncollecting the tax, the petitioners instituted the present proceedings in Julyand August, 1955.
75. While these proceedings were pending, the question of the effect of Art.186 again came up for consideration by this Court in the case of the BengalImmunity Company Ltd. v. The State of Bihar. This Court by its judgmentpronounced, again by a majority, on September 6, 1955, held that untilParliament by law made in the exercise of powers vested in it under Art. 286(2)otherwise provided, no State could impose an tax on a sale or purchase of goodswhen such sale or purchase took place in the courts of inter-State trade orcommerce and the majority decision in the State of Bombay v. The United Motors(India) Ltd., in so far as it decided to the contrary could not be accepted andfurther that the explanation in Art. 286(1) (a) did not codes any right on theState in which the goods were delivered under a sale, to tax it notwithstanding that the property in the goods passed in another State.
76. In view of this decision the respondent was advised that it could notoppose the petitions and on October 21, 1955, it actually filed statements inthese proceedings submitting that the petitions might be allowed. Beforehowever the petitions could be heard and disposed of, an Ordinance called theSales Tax Laws Validation Ordinance, 1956, was promulgated by the President onJanuary 30, 1956. This Ordinance was later, on March 21, 1956, replaced by theSales Tax Laws Validation Act, 1956. Both these enactments were in identicalterms. The operative provision of the Validation Act is set out below.
2. 'Notwithstanding any judgment, decree or orderof any court no law of a State imposing, or authorising the imposition of, atax on the sale or purchase of any goods where such sale or purchase took placein the course of inter-State trade or commerce during the period between the1st day of April, 1951, and the 6th day of September, 1955, shall be deemed tobe invalid or ever to have been invalid merely be reason of the fact that suchsale or purchase took place in the course of inter-States trade or commerce;and all such taxes levied or collected or pupating to have been levied or collectedduring the aforesaid period shall be deemed always to have been validly leviedor collected in accordance with law.'
77. The respondent was advised that the Validation Act had changed thesituation and in view of it the petitions could no longer succeed. Thereupon,the respondent on February 19, 1957, filed fresh statements submitting that thepetitions should be dismissed. The petitions have now come up for hearing inthese circumstances.
78. The validity of the Validation Act itself has been challenged. But I donot think it necessary to decide that question. I will assume that that Act isperfectly valid. It does not however itself levy any tax. Its only effect, sofar as these cases are concerned, is to permit the Sales Tax Act to operate totax sales which took place in the course of trade between Andhra and any otherstate between certain dates. I will not refer to these dates hereafter for whatI have to say applies to sales between them only. As has been agreed betweenthe parties, as mentioned at the commencement of this judgment, the onlyquestion that we have to decide is whether a sale under which the goods weredelivered in Andhra for consumption there though property in them passed inMadras, can be taxed by the respondent. Such a sale would not doubt be a salein the course of trade between Andhra and Madras. It is said that such a salecannot be taxed by the respondent not withstanding the Validation Act, becausethe Sales Tax Act does not purport to tax it.
79. Does the Sales Tax Act then contain any provision taxing such a sale ?Now the Act authorises the levy of a tax on sales as defined in it. A sale isdefined in s. 2(h) of the Act. It is not disputed however that definition doesnot include a sale under which goods are delivered in Andhra for consumptionthere but property in them passes in Madras and no further reference to thatsection is therefore necessary. It is however said that the effect of theExplanation in s. 22 is to make such a sale, a sale within the meaning of theAct and therefore liable to be taxed under it. So I proceed to examine thatsection. Section 22 as it stood at the relevant time reads thus :
S. 22. 'Nothing contained inthis Act shall be deemed to impose, or authorise the imposition of, a tax onthe sale or purchase of any goods, where such sale or purchase takes place
(a) (i) outside the State ofAndhra, or
(ii) in the course of theimport of the goods into the territory of India or of a the export of the goodsout of such territory, or
(b) except in so far asParliament may by law otherwise provide, after the 31st day of March, 1951 inthe course of inter-State trade or commerce, and the provisions of this Actshall be read and construed accordingly.
Explanation. - For the purposesof clause (a) (i), a sale or purchase shall be deemed to have taken place inthe State in which the goods have actually been delivered as a direct result ofsuch sale or purchase for the purpose of consumption in that State,notwithstanding the fact that under the general law relating to sale of goods,the property in the goods has by reason of such sale or purchase passed inanother State.'
80. Does the Explanation in this section then say that when under a salegoods are delivered in Andhra, the sale shall be deemed to have taken placethere though the property in the goods may have passed in another State, forexample, Madras? It no doubt says, without specifying any particular State,that a sale shall be deemed to have taken place in the State in which the goodswere delivered under it though the property in them has passed in anotherState. But it seems to me impossible from the language used to say that itcontemplated a case in which the goods were delivered in Andhra though propertyin them passed in another State. For the sake of clarity I have left out inwhat I have just said the term as to consumption in the State in which thegoods were delivered and no question as to such consumption is in dispute inthese cases.
81. The Explanation opens with the words 'For the purposes of clause(a) (i).' What then is that clause It only contains the words'outside the State of Andhra.' It completes the sentence part ofwhich has preceded it. The complete sentence says,
82. Nothing in this Act shall be deemed to impose, or authorise theimposition of, a tax on the sale or purchase of any goods, where such sale orpurchase takes place
(a) (i) outside the State of Andhra.
83. It then says that no tax shall be levied under the Act on a sale whichtakes place outside Andhra. It is after this that the Explanation comes andstarts with the words 'for the purpose of clause (a) (i).' These thewords must therefore mean, for the purse of explaining which sale is to beregarded having taken place outside Andhra. The Explanation then is for thispurpose. I will how turn to the remaining and the substantive portion of theExplanation. That must explain when a sale is to be regard as having takenplaced outside Andhra. The substantive portion of the Explanation howevermentions a sale which is to be deemed to have taken place inside a State.Keeping its purpose in mind, it must be taken by saying that a certain sale isto be deemed inside a state, to say that it is outside the State of Andhra. Itfollows that the Explanation does not contemplate that the State inside which asale is to be deemed to have taken place, can be the State of Andhra. ThatState cannot be the State of Andhra, for then the Explanation would not showwhen a sale is to be deemed to be outside Andhra and that by its language isthe only purpose for which it is enacted. Therefore the Explanation can only beread as contemplating a State other then Andhra as the State inside which asale shall be deemed to have taken place. This is the inevitable resultproduced by the opening words of the Explanation understood according to theirplain meaning. So the Explanation, omitting portions of it for the sake ofclarity, can any be read in the manner shown below :
For the purposes of clause (a) (i) a sale or purchaseshall be deemed to have taken place in the State being a State other thanAndhra, in which the goods have been actually delivered notwithstanding thatthe property in the goods has passed in the State of Andhra.
84. I therefore find it impossible to say that the Explanation States that asale shall be deemed to have taken place inside Andhra if under it the goodshave been delivered there though the property in them passed in another State.The Explanation does not hence, in my view, authorise the taxation of a saleunder which goods are delivered in Andhra though property in them passed inMadras.
85. The view that I have taken of the purpose of the Explanation in s. 22was taken of the purpose of the Explanation in Art. 286(1) (a) in the BengalImmunity Company case. It was said at p. 646 of the report, 'Here theavowed purpose of the Explanations is to explain what an outside sale referredto in sub-clause (a) is.' The language of the Explanations and the settingof each in its respective provision are identical. That language of theExplanations and the same meaning. It is said that the consideration thatprevailed with the Court in the Bengal Immunity Company case in dealing withArt. 286 cannot apply in dealing with s. 22 for the latter is provision in ataxing statue which the former is not. But I do not see that this comment, evenif justified, would lead to a different making meaning put on words used whenthey occur in a taxing statue from that then they occur in a statute which doesnot purport to levy a tax. As a matter of language only, words must have thesame meaning. The words 'for the purpose of clause (a) (i)' musttherefore have the same meaning in the Explanation in Art. 286(1) (a) as in theExplanation in s. 22. I am unable to distinguish the present case from theBengal Immunity Company case for the purpose of determining the meaning of thewords used.
86. It is then said that the Explanation in s. 22 has two facets; that whenit talks of a sale inside one State, it at the same time necessarily talks of asale outside all other States. Therefore it is said that when under a salegoods are delivered in Andhra but property in them passed outside Andhra, theExplanation at the same time makes such a sale inside Andhra and outside allother States. I do not follow this. Why should the Explanation in this AndhraAct be concerned with saying when a sale shall be deemed to have taken placeoutside all other States Andhra cannot of course legislate for other State.Nor is there anything in this Act which makes it necessary for the purposes ofit to say when a sale shall be deemed to be outside all other States. Itfollows therefore that a construction cannot be put on the language used in theExplanation which produces the result of showing a sale to be inside Andhra andso outside all other States. Further, as I have earlier pointed out, the words'For the purposes of clause (a) (i)' with which the Explanationstarts, show conclusively that it is necessarily confined to a sale under whichgoods are delivered in a State other than Andhra and the property in the goodspasses in Andhra. It is no objection to this reading of the Explanation to saythat the Andhra Act would then be saying when a sale is to be deemed to havetaken be saying when a sale is to be deemed to have taken place inside anotherState and it has no power to do so as it can legislate only for itself and forno other State. Such an objection would be pointless because Andhra by sayingthat a sale shall be deemed to have taken place inside another State is onlylegislating for itself and only saying that such a sale is therefore an outsidesale so far as it is concerned and cannot be taxed in view of s. 22(a) of itsAct. It may be that it is possible in construing the Explanation in Art. 286(1)(a) to conceive of two facets because that dealt with all States or any twoStates at a time and for all these the Constitution was fully competent to laydown the law. That however is not possible when construing a law passed by aState legislature. Such law cannot regulate the laws of other States. And inthis case the conception is further impossible because the language shows thatthe Explanation is for explaining when a sale is to be deemed to have takenplace outside the State of Andhra. It is not meant to explain when it is deemedto have taken place outside any State whatever that State may be. I am thereforeunable to see that the Explanation has any facet showing what would be a saleinside Andhra.
87. The conclusion that I reach is that the Sales Tax Act with which thesecases are concerned does not authorise the taxing of a sale under which goodsare delivered in Andhra but the property in them passes in Madras. In this viewof the matter I do not think it necessary to discuss the various other groundson which the respondent's right to tax these sales was also challenged.
88. In the result I would allow these petitions.
89. By Court : In view of the opinion of the majority, the petitions aredismissed. The parties are to bear their own costs.
90. Petitions dismissed.